Capital markets at the movies
Morgan Stanley is going long on Hollywood. The global securities firm will sell bonds backed by revenues from the Paramount Vantage film studio.
Whether future productions, which in the past starred Brad Pitt and Angelina Jolie, will challenge the random walk theory, remains to be seen.
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Movie Industry is cash business. Most of the agriculturalist in India when they reach a substantial net worth are advised by the accountants to enter into the Movie industry. If income from movies crosses a certain threshold then they move into politics.
This helps them to show more expenditure than income so that the SPVs created for making movies always run into loss.
So In Indian Film industry there is always a bank credit and non-banking credit involved in movie making.
The cost of the non-bank credit is many times more than the bank credit.
This non-bank credit was mainly provided by certain family businesses or Castes / communities.
It is interesting to know of the emergence of the Hedge funds into this market and now the organised players like Morgan Stanley.
The most interesting thing about it is the increasing ability of the statistical / organised methods to map the risks in these high risk markets.
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jamespdaniel@gmail.com
Posted by: Dr James Daniel Paul | Jun 13, 2007 5:20:03 AM