'Poseidon' could be a $4 billion bomb
By Tom Tapp
Warner Bros. is nervous about "Poseidon," which opens this Friday. In Slate, a senior Warners executive concedes to Kim Masters, "We're all pretty much aware that 'disaster film' will take on a whole new meaning on Friday." The sentiment could spread to every studio in Hollywood.
If Warner Bros. $150 million "Poseidon" goes down at the boxoffice this weekend, it will signal more than just the sinking of an overpriced ship. It will sound the first statistical alarm to those pouring an ocean of money into Hollywood.
In the past two years, according to The Wall Street Journal, $4 billion dollars of Wall Street money has been lapped up by studio execs looking to fund big, tentpole pics. Long risk adverse companies such as Deutsche Bank AG, Merrill Lynch & Co. and Credit Suisse First Boston have freely given to companies such as Warner Bros., Disney and Paramount, even as those companies' (or their parent companies') stocks languish.
"Poseidon" is one of six films co-financed at Warners with Virtual Studios. When the deal closed last fall, it was worth $528 million. Just basic division would tell even casual observers that Virtual has a lot sunk into "Poseidon."
The film's demise could mean that the once cautious Wall Streeters again come to their senses and, even as prices soar above $200 million for films like "Superman" and "X-Men," the town's new favorite source of sucker money dries up.
When approached on the subject by V Life last year, Warners' chairman and COO Alan Horn said, "There's no surefire way to avoid risk. If you put up half the money, and if the movie doesn't work, you still lose half the money.' We'll see what Wall Street says.
Related Links
The Fall of Tom Cruise (SLATE)The New Deal (V Life)
Defying the Odds, Hedge Funds Bet Billions on Movies (WSJ, sub)
