Can $1 Billion for 100 Movies Be A Good Investment?

That private equity continues to pour into Hollywood. This time it's from Midwestern real estate financier Tony Reynolds, who is putting together an initiative called the Select Film Fund, which plans to invest $1 billion in slates of up to 10 movies from about 10 different producers over the next four years, according to Variety. Details of the deal are still fuzzy, but Reynolds says he plans to focus on movies costing about $10 million, and tells Variety that the fund would officially be open for business sometime in July. But he wouldn't name the banks or private investors until "our private placement is completed and our fund is fully operational." Reynolds did say the fund would be looking for projects with low risk and high profit margins. (gee, who isn't?). Interestingly enough, FINalternatives ran a piece on this deal back in April. Here's what it had to say:

"Initially, we've got a bunch of films in the $1.5 million to $2 million range but we have one film where it's done with green screen--it's a ninja movie--and that one we'll do more than $10 million," said Reynolds, who is currently putting together a board of entertainment luminaries to vet film submissions for various sources. "We'll be getting together about 12 times a year and we're also going to be using the Internet Movie Database and other matrix out there to determine what should or should not be coming in."

The article goes on to say that Reynold's has hired a few Hollywood insiders to help with his endeavor, including Will Smith's cousin K. Snyder, who worked on the Fresh Prince of Bel Air. And with full access to IMDB.com to choose investments, what could go wrong? (this last sentence should be read this with extreme sarcasm). According to FINalternatives, the fund has a five-to-ten year lockup and is targeting a 25% to 30% return. The minimum investment is $250,000.

Meanwhile, Legendary, the production company of the venture capitalist Thomas Tull, has announced that it will re-up with Warner Bros., investing $1 billion in a portfolio of films co-produced by the studio. From the NYT:

The deal, which the companies plan to announce today, extends a partnership forged in 2005. At the time, Legendary, whose participants include AIG Direct Investments, Banc of America Capital Investors and Falcon Investment Advisors, invested $500 million in a group of Warner films. The deal included some flops but also yielded the surprise hit "300" and the blockbuster "Batman Begins."

The new five-year agreement, arranged by Dresdner Kleinwort, a London-based investment bank, calls for Warner and Legendary to jointly finance up to 45 films. Included are movies like "Where the Wild Things Are," an adaptation of the classic children's book; "The Losers," based on a gritty comic book; and a remake of "Clash of the Titans."

Legendary declined to discuss rate of return, but insists it's making money off the deal. Last year, the relationship between Legendary and the studio grew tense when movies such as Lady in the Water and Ant Bully stumbled at the box office. Legendary also invested in WB's super-expensive Superman Returns.