Credit Crisis // Current

The Digital Coin and self-issued credit

A comprehensive & innovative proposal for a new system of sustainable economics.... more

sespian
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Elizabeth Warren's new model for Wall St.: 'If you can't explain it, you can't sell it'

In Elizabeth Warren's world, credit card contracts would be so simple a teenager could... more

atomiclegion
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16 comments

What can you do about high credit card rates? Not much

Rising unemployment is forcing more people to lean on their credit cards to make ends... more

Future_America
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Stop CitiBank/ Close your accounts

Did you get this letter too? Open ALL of your mail from banks and credit cards and... more

twodee
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What Wall Street bank is now the largest publisher in the world?

As media companies are forced to sell off assets to lenders, JP Morgan is buying them... more

sespian
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Scam Artists Use Phone Relay System To Fool Businesses

A new scam alert from the FBI is targeting auto shops via the phone relay system. This... more

IlyceGlink
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Got Debt? Equifax Launches Debt Wise

What happens when you lose your job and run out of money? You stop paying your... more

IlyceGlink
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Reversal of Fortune: Americans Have Lost $14 Trillion in Net Worth

Americans have experienced a reversal of fortune - and lost $14 trillion in net worth... more

IlyceGlink
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Truly Terrifying Data About the Real State of the U.S. Economy

It's a terrible mistake to confuse the momentary solvency of the financial sector and... more

atomiclegion
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There are no hard times on the red carpet at Cannes

Here's another viewpoint that sees the silver lining:

"CANNES, France — Economic downturn? What economic downturn? There are no hard times on the red carpet at Cannes, where they know how to party like it’s 1788 or at least like the prerecessionary days of 2008. On Wednesday the 62nd Cannes Film Festival opened with the customary smiles and patrician waves as the stars and auteurs promenaded into the world premiere of Pixar’s “Up.” It was all très chic, if very de rigueur, save for the awe-inspiring moment when the 80-year-old French director Agnès Varda, busy photographing the photographers, nimbly dodged being knocked over by a posing and blissfully oblivious Tilda Swinton.

Given the throb of bad news preceding the festival (“Economic Woes at Cannes” read a typical headline), you might even think that Pixar’s latest, a 3-D charmer directed by Pete Docter (“Monsters, Inc.”), about an old man who takes literal and emotional flight with the help of a child, had been chosen for its title alone, as a way to buoy the down attendees. At least for the first few days, there were more empty seats at the press screenings and breathing room in the hallways. But the mood in the Palais, the festival’s headquarters, was cautiously optimistic, or perhaps just realistic. You couldn’t help wondering, Is this thinned population the recession or a sign of a correction — an indication that there might be fewer movies clogging screens?

It’s too early to tell, of course, though the idea that there might be a silver lining to the dark clouds, particularly for the kinds of nonstudio movies that make their way from Cannes to American specialty screens, was a theme that emerged from a highly unscientific poll I conducted by e-mail before the festival kicked off. James Schamus, the chief executive of Focus Features, a specialty division of NBC Universal that recently released Jim Jarmusch’s “Limits of Control,” put the larger economic woes into pragmatic, film-world perspective.

“In some ways,” Mr. Schamus wrote, “the bad news is good news for film buffs — the drying up of hedge fund money means that while there will be fewer art-house films opening every weekend this fall, the ones that do open will have a better shot at gaining some kind of attention and audience. That means specialized film as a business will make a lot more sense than it has the past few years....” "Here's another viewpoint that sees the silver lining: "CANNES, France — Economic... more

vistapoint
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The Credit Crunch in Cannes

With the Credit Crunch and a glut of film product affecting both film financing and distribution everywhere, Cannes is not immune...

"The Cannes Credit Crunch
Too many films, too little financing put the squeeze on the presale market.

CANNES, FRANCE -- With an oversupply of films, a paucity of risk takers and an uncertain economy, the market for movies is taking a nosedive at the 62nd Cannes Film Festival. The champagne may be flowing, but funding is another story. Not only are distributors less interested in deals requiring upfront funding for production in the first place, but they're also more cautious about completed films.

"Like any market, it's a matter of supply and demand," says Jonathan Wolf, executive vice president of the Independent Film & Television Alliance, the trade association for independent distributors and producers. "Film is more elastic than other products and services, but you can't double the supply of films and expect the market to absorb it."

Hardest hit: The "presale" market, a staple of movie moneymen, where distributors finance productions by paying upfront for the right to distribute films after completion. When times were good, buyers flocked and price tags ballooned. The credit crunch dried up that game. Would-be investors are now shopping for finished movies, a far less risky bet.

"In the '90s, the marketplace would come up with up to 100% of the budget." explains Carl Clifton, managing director of The Works International, whose international launch of Anvil! The story of Anvil, a heavy metal documentary film, caused a stir at this years' festival. Clifton estimates funding from presale has dropped below 40%. Others say it's even lower. "Presales still exist for the right product." Clifton explains, "But the risk appetite is lower, and there is more purchasing of completed films."

Buyers "have come to Cannes with specific projects in mind and are finalizing deals which were already in the pipeline," says Peter Carlton, senior commissioning executive of Film4, which scored success backing the breakout hit Slumdog Millionaire.

The presale meltdown is driving filmmakers to "gap" financing, highly risky and priced that way. Gap lenders retain rights to collect ahead of other lenders, charge interest rates north of 8%, plus legal fees, and may also take a back-end piece. If on the maturity date the producers haven't made adequate sales to return money to the super gap lender, this party steps in and acquires equity in the production.

It isn't all gloom. Film4 is actively building a pipeline of projects including festival selection Looking for Eric, which received major buzz on the Croisette red carpet, and Hunger, which took the Golden Camera Award at the festival in 2008.

And "sooner or later people will need product," says Barry S. Babok, of Babok & Levin LLP, a Cannes regular and attorney who specializes in gap lending. "There may have been a glut, but once the credit market gets better, people will be more comfortable spending money, and will again demand product." And Hollywood endings."With the Credit Crunch and a glut of film product affecting both film financing and... more