Paramount in $300m Dresdner film deal

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The fallout from Paramount’s messy separation from Tom Cruise looked to have abated on Monday when the movie studio and Viacom subsidiary struck a $300m deal with Dresdner Kleinwort to make 30 films.

Under the deal, a pool of investors brought together by Dresdner will invest in the Melrose 2 fund to develop a slate of films. Paramount and its offshoot brands – Paramount Pictures, DreamWorks SKG, MTV Films and Nick Movies – will produce the films.

The deal represents a big vote of confidence in Brad Grey, Paramount’s chief executive, and comes weeks after Sumner Redstone, Viacom’s chief executive, fired Mr Cruise, Paramount’s biggest star, complaining the actor’s appeal had waned.

The split with Mr Cruise had sparked talk that Paramount’s efforts to raise money for a roster of films might be in trouble.

However, Dresdner on Monday said the parting with Mr Cruise had not damped investor interest in the Paramount slate.

“The successful closing of Melrose 2 demonstrates a strong investor appetite for the film sector, as well as Paramount’s considerable appeal to the investor community,” said Laura Fazio, managing director and head of media, global banking, Dresdner Kleinwort.

Upcoming 2007 releases funded under the deal include: Freedom Writers and The Spiderwick Chronicles.

The deal has also funded films from the 2006 Paramount slate, including Jackass: Number Two, World Trade Center and Nacho Libre.

Mark Badagliacca, chief financial officer at Paramount, said it was “always prudent to have partners on these films. It makes sense because it gives us the ability to have more swings of the bat. It’s smart too, from a return on capital standpoint”.

Ms Fazio agreed that a broader number of films offered investors a better chance of making good returns. “The smart studios know that if you structure wisely ... investors have the opportunity to make attractive returns and they will come back again and again.”

She added the bank had attracted a “diverse mix” of investors, adding there had been “resounding interest” in the Paramount films.

”The greater number of films the better,” she said. “The goal in these transactions is to have a diverse slate of assets. The greater the diversity, the better your opportunity.”

The deal follows other financing arrangements struck between studios and investors. Sony Pictures and Universal recently raised $700m from hedge fund investors in a deal brokered by Relativity Media, while Dune Capital Management - formerly owned by George Soros - has a $350m investment at 20th Century Fox.

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