Hollywood Meets Hedge Funds, Courtesy of Milken

Date: Wednesday, April 25, 2007
Author: The New York Times

As Hollywood and hedge funds enjoy an ever closer relationship, a conference that began this week at the Beverly Hilton may help to strengthen those ties. The gathering, held by the Milken Institute, a think-tank founded by the former junk-bond king, Michael Milken, features more than 100 sessions and 300 speakers.

But Hollywood commentator Nikki Finke reports that the buzz in Tinsel Town focused on a single session that took place Monday morning: “Hedge Funds: The Last Unregulated Frontier — But for How Long?”

The event featured speakers such as Marc Lasry, founder and managing partner of Avenue Capital Group (and friend to Hollywood darlings Bill and Hillary Rodham Clinton); Jon Lukomnik, managing partner of Sinclair Capital; Robert Matza, partner and president of GoldenTree Asset Management; and Paul Roth, partner of Schulte Roth & Zabel.

Though they may have fielded movie pitches in the elevators, the hedge fund heavyweights at Monday’s session talked mostly about the state of the industry — and specifically, the question of whether these private pools of capital, usually restricted to institutional and wealthy investors, would be hit with tighter regulations.

The general consensus among panelists, according to a summary posted on the Milken Institute’s Web site, was that the industry would indeed face more rules, though it was unclear if those rules would be “smart.”

Ms. Finke compared Monday’s session to the Predators’ Ball, Michael Milken’s famous gathering of leveraged-buyout mavens and Hollywood players of the 1980’s.

Two decades later, a lot has changed, including hedge funds’ interest in film financing. Though these funds have long dabbled in the business, the trend has accelerated, with many funds agreeing to finance entire slates of movies instead of single pictures.

Virtual Studios and Legendary Pictures, two vehicles backed by hedge funds, were among the production companies behind the recent swords-and-sandals epic “300.” An affiliate of Dune Capital Management, a hedge-fund firm once controlled by financier George Soros, kicked in money for “Borat.”

Major Wall Street firms are also moving deeper into the movie business. Merrill Lynch last week led a group of investors that formed Summit Entertainment, new movie production and distribution company that expects to back as many as 12 feature films each year.

And other, similar deals could be in the pipeline. After all, Hollywood loves a sequel.