Scene Stealer: Oil And Hollywood Don?t Always Mix

LOS ANGELES — LAST fall, just as the movie capital was starting to panic over slowing injections of cash from hedge funds, Warner Brothers struck oil.

George Clooney at the Dubai International Film Festival last December. Hollywood is courting Arab financiers, but reaching deals can be complex.

The studio, home to Bugs Bunny and Harry Potter, reached an unusual multibillion-dollar agreement with investors in Abu Dhabi. The partners agreed to build a theme park, a hotel complex and a chain of movie theaters in that Persian Gulf emirate, while also creating a $500 million fund for making movies and a $500 million fund for developing video games.

The Warner deal seemed to offer a solution to worries that hedge funds were tiring of Hollywood after several movie-financing deals gone bust. The hedge funds are packing their bags? No problem. Send in the sheiks.

But the likes of Abu Dhabi, Dubai and Qatar — so far at least — are not delivering the kind of gusher the industry had hoped. While media companies have signed lucrative licensing deals to bring movie-themed amusement parks to the desert, Hollywood’s money hunters are largely coming home without investments designated for movies.

“Film people are making the trip, but the money is mostly a mirage,” said Amir Malin, a partner at Qualia Capital, a media-focused investment firm.

As it turns out, Hollywood’s typical bag of tricks doesn’t work particularly well with the people who control the dazzling sovereign wealth of the Middle East. Without being able to guarantee sizable returns — it’s anybody’s guess at the outset whether a film will make money — moviedom typically relies on selling investors a lifestyle.

But Middle Eastern investors, for the most part, are not enticed by the chance to rub elbows with celebrities or walk red carpets. The Chateau Marmont, bless its hard-partying soul, pales in comparison to the Emirates Palace, a $3 billion hotel trimmed with gold.

Content poses a bigger hurdle. Gulf companies are never going to pour money into raunchy comedies (“The 40-Year-Old Virgin”), films that deal with politically charged topics like terrorism (“Munich”) or prestige projects that go against cultural and religious beliefs (“Brokeback Mountain”).

And because the studios usually keep potential blockbusters for themselves, investors are mostly offered middle-of-the-road pictures that carry a lot of risk. Sheik Sultan bin Tahnoon al-Nahyan, a member of the Abu Dhabi royal family, recently told Variety that those types of movies wouldn’t cut it with savvy Persian Gulf financiers.

“If we convince the businessmen in the region there is a return, then they will jump in and invest,” he said.

To be fair to Hollywood, the emirates are doing an awful lot of flirting. In recent years, Abu Dhabi and Dubai have created sparring film festivals, courting stars like Sharon Stone and George Clooney to attend and, in some cases, film movies locally. Last October, Abu Dhabi unveiled a film investment fund amid much hype — one trade newspaper awkwardly billed it as “the long-awaited Holy Grail of Arab film financing” — but no sizable deals have been announced.

The emirates have been aggressive in one area: wooing movie studios to help build theme parks. Within the past year, DreamWorks Animation, Marvel Entertainment, Paramount Pictures, Warner Brothers and Universal Studios have all announced elaborate plans to build thrill-ride wonderlands in the region.

(One notable exception is Walt Disney, which says it is not yet convinced that there will be enough tourists visiting the United Arab Emirates to sustain competing parks. Disney is instead concentrating on China, where plans are advancing for Shanghai Disneyland.)

Theme park deals are great, but keeping the movie pipelines pumping is the studios’ focus. And outside investment has become crucial to the process. As the cost of making and marketing movies escalates, “studios have come to realize how much they dramatically need outside capital,” Mr. Malin said.

So how did Warner pull it off? The back story starts, somewhat appropriately, with a horse race.

Hunt Lowry, a veteran producer with credits like “What a Girl Wants” and “A Time to Kill” on his résumé, attended the Dubai World Cup in 2006 and was stunned at the region’s building spree. Abu Dhabi had just unveiled plans with Ferrari for a theme park, and Mr. Lowry said he saw an opening for Warner.

He came back to California, got Warner executives on board and reached out via an acquaintance to Aldar Properties, a state-controlled real estate developer in Abu Dhabi.

“Our approach was not, ‘Give us some money so we can go make Hollywood movies and wouldn’t that be fun,’ ” Mr. Lowry said.

Instead, he said the pitch emphasized how Warner could help Abu Dhabi become a bigger tourist destination and how the pair could join forces to make mutually agreeable movies with broad appeal.

Warner also said it would separately work with Abu Dhabi to develop and produce a group of Arabic-language films for local distribution.

AFTER several trips to the United Arab Emirates — Warner was simultaneously talking to Abu Dhabi’s rival, Dubai — Mr. Lowry and the studio walked away with a huge deal. “We looked them in the eye and we felt that we could be long-term partners,” said Kevin Tsujihara, the president of Warner’s home entertainment unit. Aldar executives could not be reached for comment.

Work is progressing. In the coming weeks, an Aldar delegation will arrive in Los Angeles to scrutinize detailed theme park plans for final approval. In Abu Dhabi, construction crews have broken ground on the movie theaters.

And the joint venture recently unveiled its first film financing effort. The Warner-Abu Dhabi film fund is helping to bankroll “Shorts,” a fantasy from the filmmaker Robert Rodriguez about misfit children who find a box that unleashes mysterious powers.

Filming will begin next month in a suitably oily location: Texas.

Tag Cloud

External Information

Additional Information

Where Am I?