Benjamin Waisbren does not mince words when he weighs up the film business from a financier's point of view (and using financiers' parlance). "Film's a wonderful, iconic art form; it's not a great asset class," says the New York-based president and CEO of new film-finance operation Continental Entertainment Group (CEG). "Because it's not liquid, it's not transparent, it's really not predictable. It's a difficult, challenging asset class."
So why is he in such a tricky business' "Because if you're a problem solver and you understand the fundamentals of specialty finance or deal-making, you can do well. If you provide a service to your counter-parties, you're going to create enterprise value."
Launched last April - and originally headed by Initial Entertainment Group (IEG) co-founder Colin Cotter, who has since left the company - CEG is backed by private equity from financial services giant Citi. With offices in New York, Los Angeles and Paris, it has two operating units: Continental Entertainment Capital (CEC) does single picture financing, structured financing and institutional transactions; and Continental Pictures, which has a second-look agreement with IEG, is designed to acquire distribution rights and exploit them through IEG's sales operation.
Because it makes direct investments rather than acting as a syndicator, CEG has to treat its customers well, Waisbren explains. "The first order of business for us," he asserts, "is to do what we say we're going to do when we said we were going to do it. It's the credibility factor. Our credibility has got to be our raison d'etre."
The customers that have been named so far include The Weinstein Company, in whose $285m Asian film fund CEC is participating; Odd Lot Entertainment, whose Frank Miller project The Spirit is the beneficiary of CEC's first single-picture financing deal; and European sales and distribution outfit Wild Bunch. With the latter, CEC signed a two-pronged debt and equity deal thought to be worth more than $150m last September.
CEG is giving Waisbren a second run in the film business after his not-always-happy initial experience. As managing director of hedge fund Stark Investments, the attorney-turned-financial executive set up Virtual Studios, the banner that invested in IEG and Wild Bunch, but also in a group of Warner Bros films that included high-profile flop Poseidon. Waisbren, who was fired by Stark soon after Poseidon's release, says Virtual's relationship with Warner "was not allowed to play itself out".
The sailing has not been entirely smooth for CEG either, with Citi recently revealing a $10bn fourth-quarter loss and widespread job cuts. But the good news, says Waisbren, is that "our budget's approved for 2008, we're a profitable business and we've got the mandate from a global financial institution that's still a money centre bank (a large bank dealing with governments, corporations and other banks)."
In fact, Waisbren suggests, with the US sub-prime lending crisis making it harder for hedge funds to operate in the film industry, CEG is now well positioned for growth.
Besides the $150m acquisition fund handled by Continental Pictures, CEC has already underwritten commitments of around $400m, he says, and "we have four or five transactions that are on the rails right now for this quarter".
And in dollar terms, Waisbren adds, at least half the company's business is being done outside the US. "Our mandate is to be a global force dominating market share."
- Benjamin Waisbren is keynote speaker at Screen International's European Film Finance and Sales Summit in Berlin, February 7.