How to Invest in Movie Franchises
Ever wondered how to become an investor in the next great movie franchise? A movie franchise is typically based on the intellectual property of an original work of media or commercial product such as Batman or Pirates of the Caribbean. Due to the significantly high costs of making a series of films that comprise a movie franchise, the investment comes from a wide assortment of financing vehicles such as debt financing, government tax credits, private equity, hedge funds, product placement fees and grants.
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Investing in Movie Franchises
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Buy stock in a Hollywood movie studio. This is the easiest and quickest way to invest in the next major movie franchise. The vast majority of film franchises are produced by Hollywood studios, which are in turn owned by a handful of multinational corporations. The largest studios are owned respectively by Time Warner, News Corp., Viacom and Walt Disney, but you should pick up the latest edition of Variety magazine to check for the latest takeovers, as well as the sales of film rights for the next blockbuster franchise.
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Talk to a trusted private wealth management adviser. According to Yuri Rutman, CEO of Noci Pictures Entertainment, a film finance and production company based in Los Angeles, almost $10 billion poured into the media and entertainment business before the Wall Street credit crisis of 2008. JP Morgan, Deutche Bank, Citigroup, Merrill Lynch and many others have poured capital into Hollywood through a portfolio approach to film investment in which they spread their risk by buying a stake in several films at a studio.
While the credit crunch of 2008 has severely hampered Wall Street's forays into Hollywood, there is never a shortage of interest in being part of the next movie blockbuster. Financial entities have simply demanded better terms and placed greater scrutiny on the details of the studio deals, according to Ryan Kavanaugh, whose Relativity Media has invested in films with budgets totaling more than $8 billion.
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Become an accredited investor. While there is no set minimum for investing in a motion picture, potential investors in film securities are typically required to be accredited. The SEC details the exact regulations to become an accredited investor on its website (http://www.sec.gov/answers/accred.htm), but the basic requirements for an individual investor are a net worth exceeding $1 million and an income exceeding $200,000 per year.
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