Paramount Finance Deal Falls Through – No Effect On Trek

This afternoon the Financial Times reported that a finance deal between Paramount and Deutsche Bank has fallen through. The FT report states that Paramount is seeking funds to partially finance “up to 30 films, including possible blockbusters such as the sequel to Transformers and a new version of Star Trek.” However a trusted studio source tells TrekMovie that this deal will not have an impact on the post-production of Star Trek.


Dozens of fans have emailed TrekMovie with the Financial Times article. This is likely due to the article getting top billing at the popular sensationalist Drudge Report website. Although the headline seems concerning, the facts are that the deal is just an attempt for Paramount to mitigate some risk in its portfolio, which is standard practice. Remember it was just a month ago that Paramount announced it was the first studio in 2008 to cross the $1 Billion mark in sales (both domestic and international), so it isn’t like they are broke.

A trusted insider tells TrekMovie that this deal has no impact on Star Trek, noting “we have already shot the movie.” The source said that the post-production was budgeted and they are still working to finish the film by the end of the year. The source also noted that Paramount already entered into a co-financing agreement for Star Trek with Level 1 Entertainment. Although such a deal is new for Trek, it is becoming more and more common with tent pole films.

A Paramount source tells Deadline Hollywood a similar story, noting (on the Star Trek Level 1 deal and other similar deals Paramount has for other films):

We like those deals and economics much better. They’re far stronger for us,. We’re very comfortable as is Viacom with our business plan. We’ve now laid off as much risk as we need to.

Also it should be pointed out that it was Paramount that backed out of the deal and not Deutsche. A spokesperson tells Variety:

The deal terms had evolved to a point where they were unattractive when compared to alternative sources of financing available to Paramount

The failure of the Deutsche deal does not mean that Paramount will not be able to lay off the risk, the FT notes that Paramount will wait until credit markets are more favorable or in the worst case just seek funds from the corporate parent Viacom. Regardless, it will not effect the release of any of the films that are part of the financial package, as noted by the FT:

While Deutsche’s decision to close its film unit is a blow for Paramount, the films affected by the deal are still likely to be released as scheduled.

But if the studio fails to revive the deal with another bank it could force Paramount to seek funds from Viacom, the media conglomerate that owns the studio, to produce the titles. This would expose the company to greater financial risk if the films fail to perform as expected.

Paramount Vice Chairman Rob Moore backs that up, telling Variety the deal falling through "won’t affect our current or long-term production slate."

Bottom line is that this is just Paramount working to do some financial risk management. The latest deal fell through, but other deals are to be had and in the end it is not really anything that affects Star Trek .

newest oldest

Remember those days when one studio funded a movie? that is no longer the case.

Sean4000

The LAST thing we need is post production FX problems with Trek XI.
Glad to hear that will not be the case.

Harry Ballz

People with an accounting background should NOT be allowed to run major studios. They lack vision and are usually totally bereft of any imagination!

Fansince9

Maybe this is a good thing for Trek in the long run. If they can really make a really big go at this movie and if it is a big success, maybe that will be a good incentive for these banks to rub shoulders with Paramount, and that may make it easier for them to get these funds…I hope.

CmdrR

Hollywood was founded by filmakers who wanted to be as far away from the eastern banks who provided their financing as possible. Ah, times have changed…

Commodore Redshirt

It was Drudge who blew the story out of proportion. As quoted above:
“…it was Paramount that backed out of the deal and not Deutsche (Bank)”

This kind of financing goes on all the time. I’m sure there will be no disruption in post production or promotion of JJ’s Trek

Ryan

#3 “People with an accounting background should NOT be allowed to run major studios. They lack vision and are usually totally bereft of any imagination!”

I’m a CPA and sadly I agree

Denise de Arman

Anthony, you have lightning fingers and a much-appreciated ability to churn out great articles – thank you for the dedication on our behalf.

Harry Ballz

Ryan, I appreciate your candour……you show hidden depths!

Beam Me Up

Paramount in trouble? Uh yeah. Didn’t they release Iron Man?! You’d think they’d be rolling in dough.

James Limbaugh

Matt “Sidney Blumenthal Beat Hillary’s Lesbian Lover with Clinton’s Love Child” Drudge is not a reliable source of original news; likewise, his misleading sensationalizing of news stories makes his site an untrustworthy source when it comes to the truth. Even conservatives, who used to love his site, have for the most part written off Drudge as a liability.

Matt

@ 10

Actually Paramount was just the distributor for Iron Man.

Miles R. Seppelt

Grammatically, I believe that “effect” would be the preferred choice for the article title, rather than “affect.”

OneBuckFilms

Thank you Anthony for clarifying the non-story.

I know it set a few people into a state of panic with regards to financing Star Trek’s post production.

I shudder at the thought of a synthesizer score and Star Trek V visual effects.

Beam Me Up

Well, they have Indiana Jones too. That movie has been in the top ten since May. Dping great!

Jordan

# 15

LOL I’m with u on that one!

DaveM

Gee the other thing that should be pointed out since you sited the Deadline Hollywood story is this..

While Paramount is busy taking out ads bragging about making over a billion dollars this year, a lot of that is NOT money that will go to Paramount. Most of that money is going to Dreamworks, Lucasfilm and others who actually made the films. Paramount is only collecting a very small distribution since they have not financed any of these films themselves.

With other sources financing Star Trek, Transormers 2 and G. I Joe next summer… again the money will go to the companies that are financing the production and not Paramount (with the possible exception of Star Trek since they have held the rights on that property since the late 60s.

section9

The point is not how ST Prime will be affected. The point is how the downline Star Trek films will be affected, given the fact that Paramount’s big draws have all been Dreamworks products.

However, Colonel Spako has left the building, given the fact that Dreamworks is separating from Paramount. It’s financing downline Star Trek that could be a problem.

Other than the Chick Flicks, ST may be the only thing Paramount’s got.

Stan Wingson

Affect is a verb not a noun, title should read No Effect on Trek.

Nikki Finke is a good, reliable and independent reporter as is Anthony.

Thanks, dude.

What this really means for Star Trek fans is that Trek movies will have a larger production budget.

Remember STII: TWOK? The most popular film in the franchise had an awesome story, but its budget was only $15 million due to the failure of the $40 million ST: TMP. It even had stock footage recycled from the first film, remember?

Where before everyone was trying to recapture lightning in a bottle by duplicating the unique success of STII, now Paramount can allot the larger budget these movies are due, and spread the risk (and potential success) among other financial partners.

Larger budget means more stories actually set in space and less “bottle shows.” No bad news here!!!

The “bottle shows” almost exclusively took place on spaceships and were shot on soundstages. So far this bigger budget movie has been reported to be shot largely on locations meant to represent planet-side places. In my book the more location shooting the better. It tends to look more real and more epic.

so, uh… so, I can just put away me strings and gluey, plastic models and colored flashlight bulbs I was hopin’ ta’ sell ta’ J.J.’s post-production staff then?

Arrrrrr… I be tha’ loser here then…. anyone else makin’ a space film? Maybe tha’ Sci-Fi channel can use me strings and gluey models fur a new production… “ManEating Saucers”…

even during an economic slump, movies continue on as they be tha’ cheapest form o’ entertainment fur yerself after yer factory be sent ta’ Latvaria…

Hmmm… time fur me ta’ go ta’ some fortnight computer skills school… learn a new trade… or just re-enlist…

Arrrrrrr…

OneBuckFilms

22 – ST:TMP was not a failure finantially, but it was far from a critical success as we all know.

Paramount wanted to cut down the costs because sequels often don’t reach the same revenues as the first film, and there was a lot more competition in 1982.

It should also be noted that a significant portion of the funding for Star Trek: The Motion Picture was simply rolled over from the long development process for Star Trek: Phase 2, and the planning for the Star Trek: Planet of the Titans movie (never got beyond initial idea for good reason), which had been going on since 1975.

ST:TMP itself was not as highly budgeted as it would at first appear.

Dr. Image

Maybe they could get Bran Ferren to finish the effects real cheap!
(Just kidding. Bran worked miracles with Altered States- credit where it’s due!)

JL

#25

“ST:TMP itself was not as highly budgeted as it would at first appear.”

Flat-out not true. $40 million at that time was the higest budget ever for a movie. I remember reading that in an article at one point.

DaveM

#10 – Iron Man was a MARVEL picture that was distributed by Paramount. Paramount did not finance it. They just get a small distribution fee.

Rob Moore backs that up, telling Variety the deal falling through “won’t affect our current or long-term production slate.”

Notice the word “current”. There are hopes that if ST does well, three more pictures will be made after that. i would say that this effects the likelihood of those pictures being put into production, but not the current one.

cbowyer

Doesn’t surprise me, I believe Deustch Bank had a huge exposure to those sub-prime mortgages. I’m sure they’re not as flush as they used to be.

ST:TMP’s budget of 40 million was the highest ever for a movie at the time but they didn’t spend it all on the movie. A sizable chunk of the budget paid for other stuff mostly to do with the shelved second tv series. I can’t remmeber all the details but they discuss it briefly in the audio commentary of the Director’s cut DVD for ST:TMP.

Joel

Let’s look at the economy overall. Yesterday Anheuser Busch accepted a massive buyout by Inbev. Some American staples just can’t make it on their own anymore, and we shouldn’t be surprised. It’s not the end of the world. Paramount will secure funding from someone else. They are becoming a major player studio again, even with the Dreamworks debacle and the fact that they simply distributed Ironman rather than producing it. Paramount still has their name in so much. Star Trek is their real key, if it bows well next year, they’ll be fine, despite the loss of funding to the studio.

7 of 5

Drudge never gets it right; it’s the way he tinkers with the facts that keeps him in business, much the way Faux Noise does.

Duncan MacLeod

Other less good trek sites are reporting it like drudge does. Why cant people get their facts right

Captain Dunsel

#20
“Affect is a verb not a noun, title should read No Effect on Trek.”

… Well, not always….

I hope a slight smile will not effect a betrayal of my amused affect when I point out that an insufficient consideration of etymology can adversly affect the intended effect of the sentence under consideration.

BTW, you’re right – It SHOULD be “effect” in the case of the headline…

Affectionately, Captain Dunsel

Per Webster:
Effect – Verb (transitive) – To cause to come into being.
Affect – Noun – The conscious subjective aspect of an emotion considered apart from bodily changes
Affect – Verb (transitive) – To produce an effect upon
Effect – Noun – Something that inevitably follows an antecedent (as a cause or agent)

krikzil

I subscribe to FT Times so that’s where I read it. (Drudge tries too hard to make everything sensational so I never read his dreck.) I imagine we will see a lot of belt tightening by the studios with the credit crunch. Sadly, that probably means more formulaic dreck, less risk on projects that aren’t mainstream, guaranteed hits.

me

Outch, the name of the bank is Deutsche Bank and not Deutsche.
Deutsche just means German, an adjective is not a full name.

I think this will be more a problem for small productions, who won’t be done when they can’t finance them. However the big productions – as Star Trek seems to be seen by Paramount these days – who already reached a critical stadium of post production will be made, because they expect the big money from these big blockbusters.