Don’t Invest in Hollywood


Private, like many of us, is a huge fan of Vipal Monga

– financial journalist, filmmaker, and all-around good guy. Better yet,

she has a subscription to Monga’s home, the Daily Deal, which means she can

quote some of his pull-no-punches journalism, this time on the subject of funds

which invest in Hollywood movies:

The separation of investors from their investments is a hallowed Hollywood


Hollywood’s structured financings may be the worst way ever to invest in the

film industry. This is especially true for equity investors, located at the

bottom of a movie slate’s so-called waterfall…

What’s being whispered in Hollywood corridors today will then resonate all

the way to Wall Street. "My understanding from people who invested in

the equity is that they are totally wiped out," says the expert on studio


(Full disclosure: I worked with Monga at Bridge News, way back in the 20th

Century, which is one reason I’m giving him all the props here rather than his

co-author, Richard Morgan.)

Only a fool, I think, would invest in the expectation of making a profit either

in films or in art. Both Hollywood and the art world are essentially cartels,

which are very good at extracting money from rich people while tantalizingly

promising them jam tomorrow – and lots of glamor today.

Buying art can make sense all the same, if you love it. But it’s a good idea

to let someone else produce the movies you love. For $11 you can get all the

benefit, and leave the costs and the headaches to starry-eyed fools.

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