The rolling credit crunch continues to claim innocent victims: credit-card holders with good payment records who have seen rates jacked up; jumbo mortgage borrowers with good credit who are forced to pay higher rates; and now, aficionados of big-budget Hollywood movies.
Matthew Garrahan and James Politi have the goods in the Financial Times:
"The credit crunch shaking world markets has hit Hollywood after Goldman Sachs and Deutsche Bank, which were trying to raise up to $1bn to finance films for Metro-Goldwyn-Mayer, withdrew their commitment to underwrite the deal. Bringing in private equity, hedge fund and institutional investors to fund "slates" of several films has become a popular way for Hollywood studios to spread the risk attached to production.
But with credit markets tightening, the attempt by the banks to raise $700m-$1bn for MGM productions and co-productions has been blown off-course, according to people close to the situation.
The financing would have provided funds for films including The Hobbit, an MGM co-production with New Line Entertainment, and the fourth installment in the Terminator franchise. It's also likely that funds would have gone towards the next James Bond film, an MGM co-production with Sony."
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