Is this the biggest show in town?
Funding the film industry by securitizing future receivables is a potentially bigger business than music royalties, mainly because there is more need for money - it's unlikely that anything like the $200 million or more spent on making this year's blockbuster Titanic will be spent on pressing a new record.
And there is often a funding gap in the film industry. "It's not easy to get banks to fund films and so a properly structured securitization can give them [film makers] a good cost of funds," says Patrick van der Borgt, a director in asset finance at Credit Suisse First Boston in London.
There are basically two ways of doing film securitizations. You can use the future receivables from a film yet to be released, so effectively gambling that the film will be popular. Or you can draw on the income from a film library. MGM, for example, which has a B/BB rating, has a library of over 1,000 films, and one banker suggests that securitizing part of this might have been a better option for funding the company's capital needs than its unsatisfactory IPO last November.