By feeding the studios' hunger to greenlight every half-baked idea they possess, financiers are surely contributing to an even bigger cataclysm, argues Colin Brown.
The US film industry is just months away from another talent strike. Unless there's a dramatic breakthrough in the studios' rancorous negotiations with the Writers Guild of America (WGA), there's every chance that 12,000 Hollywood screenwriters will just walk off the job when their employment contract expires on October 31.
The last time this happened, for 22 tortuous days in 1988, it cost the industry some $500m and delayed the key autumn television schedule.
At issue is how much more - if any - writers should be compensated for a future in which their digitised creations will appear with increasing frequency on outlets such as the internet, mobile phones and video-enabled iPods.
Predictably, writers want to see their system of 'residuals' expanded to embrace these new viewing platforms. Residual payments, which for writers total some $100m a year, already account for more than half the income earned by the rank and file of the WGA's membership.
Just as predictably, the studio and network employers are refusing to budge an inch. If anything, the Hollywood establishment wants to rethink residuals altogether before agreeing terms on a new three-year extension with the union.
Pleading poverty, or at least diminished returns in the face of piracy and competing forms of entertainment, studio overlords feel that all their costs should be recouped before allowing any creative participants to share in the gross spoils.
With such hardline stances, both sides are clearly spoiling for a fight - knowing full well that talks will set the tone for subsequent labour negotiations with actors and directors; both their contracts run out next summer.
As in 2001, when guild negotiators walked out of fractious talks with management, Hollywood is certainly girding itself for a production shutdown. There is widespread talk of studios and TV networks pre-emptively stockpiling scripts and, in some cases, accelerating the production process on certain projects. A July 10, 2009 release date has already been declared for the Jerry Bruckheimer-produced Prince Of Persia - even though the project still lacks a cast, a director and, indeed, a final script.
In their front-loading frenzy, the studios have found themselves an unexpected ally: the hedge funds and their willing enablers from the banking community. Rather than retreat from Hollywood after being bitten by some questionable slate deals, institutional investors are turning up the money tap.
According to research published this week by Screen International, another $15bn will gush into the film industry within the next year - with two-thirds of that money coming from banks such as Dresdner Kleinwort, Merrill Lynch, JP Morgan Chase, Citibank and Deutsche Bank.
This exceeds even the $11bn that has been committed in the past 20 months - despite all the market jitters caused by bad loans and defaulting mortgages.
As media banker Laura Fazio explains, this tidal wave of financing has been caused by a 'perfect storm' of conditions: the studios are under pressure from conglomerate owners to justify their capital expenditures; production heads are far more comfortable these days opening their kimonos and sharing their accounting books with potential partners; and there is a deluge of hedge fund and private equity money in search of arcane new investment opportunities.
The Perfect Storm provides an inadvertently apt analogy. As anyone who has read, seen or actually lived through the kind of catastrophic events chronicled by Sebastian Junger's bestseller, such gale-force collisions have a habit of drenching, if not capsizing, all that lies in their path.
By feeding the studios' hunger to greenlight every half-baked idea they possess, financiers are surely contributing to an even bigger cataclysm. The last thing anyone needs is to be swamped by a run of hurriedly conceived, poorly produced films.