Film financing fascinates me. There's so much involved; determining the risk associated with a particular project (on some level, this is impossible to do, since you can't predict how the public will react to a cinematic concept), figuring out how much exposure to the film industry a studio and/or equity entity should have, trying to eliminate the potential to be blinded by the alluring glamor that an association with a Hollywood investment by necessity implies -- believe me, there's a lot of complicated financial and social politics going on when one puts together a deal.

So, the following article from Reuters caught my attention. It concerned Viacom's (NYSE: VIA) movie asset Paramount. The article states that Paramount is having something of a tough time lining up funds from investors for its next slate, and that it might be looking to set up about $400 million.

The problem is, hedge funds and other investors haven't profited as much as they expected to from their piece of the action in the movie business. Therefore, they could be reticent going forward in terms of supplying studios with monies to produce celluloid entertainment. This is very understandable in my opinion; the movie business is hit-or-miss, and evaluating a project's ability to secure a return is about as easy as receiving a compliment from Simon Cowell. The Reuters piece implies that deal structures will have to change, which is something I've discussed previously -- I definitely think movies could be cheaper if the powers that be would just get their acts together.

Do I think Paramount will eventually get its financing, and therefore reduce its risk exposure to the exhibition industry? Yes. But, here's a message to the hedge funds/banks/etc. that pony up investment dollars for cinematic projects -- force the studios to think outside of their coveted box and to respect and appreciate the use of other people's money. Tell them to limit compensation to stars, and to keep budgets and marketing campaigns at a sane level. Of course, as someone recently reminded me, Hollywood accounting is a funny, complex beast, and it's pretty tough for outsiders to strike fair deals with Tinsel Town's sharks -- well, alternative financing entities should still keep up the pressure, as it would benefit not only them, but shareholders in companies such as Disney (NYSE: DIS), News Corp. (NYSE: NWS), Time Warner (NYSE: TWX), etc., as well.

Disclosure: I own shares of Disney; positions can change at any time.