In August, BloggingStocks' Kevin Kelly wrote about signs that the credit crunch could have a material impact on the ability of Hollywood to finance movie projects.

Sunday's New York Times writes about the recent emergence of special funds for investing in Hollywood productions, including the $600 million Gun Hill Road 1, a fund maintained by Gun Hill Road LLC. These funds are fueled by dollars from hedge funds and private equity firms

According to The Times, "All of the hand-wringing leads to a basic question: What if some of the hedge fund and private equity guys (and they are still mostly guys) pack their bags and head home to Connecticut? How bad off would the studios really be? One answer is this: A little less money might not be a bad development for studios and, heaven forbid, for moviegoers."

Apparently the willingness of hedge funds and private equity types to invest in these projects (I would speculate that many of these former high-school-nerd money managers invest in films not to generate a ROI, but rather to boost their EGO, and show those kids who made fun of their pocket protectors what's what) has lead to a movie glut, with a lot of sub-par, big budget movies getting financed that never should have. Doesn't that sound a lot like the last months of the private equity bubble?

In any case, maybe a decline in the dollars available for movie productions wouldn't be such a bad thing. Perhaps Hollywood can get away from its infatuation with special effects and big names, and focus more on creativity and art.

Should Wall Street cut ties with Hollywood? originally appeared on BloggingStocks on Sun, 30 Sep 2007 19:26:00 EST. Please see our terms for use of feeds.