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Insomnia Media gets $550 mln from Egyptian company
LOS ANGELES |
LOS ANGELES Nov 27 (Reuters) - Entertainment company Insomnia Media Group said on Tuesday it is receiving a $550 million cash infusion from Egypt-based Borak Holding, the latest in a growing list of Hollywood companies to obtain Middle East funding.
Under terms of the deal, Insomnia, an independent television and film and talent services company founded in 1994 by Bret Saxon and Jeff Bowler, will retain majority ownership and use the money for acquisitions and additional film projects.
Asset management firm Borak joins an expanding group of companies from the region who are financing Hollywood as U.S. private equity investors, who have pumped an estimated $10 billion into the industry in the last three years, have grown more skittish.
"With oil now at about $98 a barrel, the money from that region is creating enterprise for everything from real estate to entertainment," said Insomnia's Saxon, who also serves as chairman of Transactional Marketing Partners, a marketing consultancy, in an interview.
Insomnia and Borak are currently collaborating on an untitled $70 million war epic being shot in Egypt, Morocco and Los Angeles.
Saxon has worked with Borak for 12 years outside the entertainment sector on real estate and energy deals. "Now, they're looking for more interesting places to put their money," he said, adding foreign investors were more attractive in some ways than U.S. investors in Hollywood.
"These investors are more aggressive and easier to deal with," he said, noting U.S. bankers typically require specific kinds of distribution deals and stars attached up front before committing to film and TV projects.
In September, Warner Bros (TWX.N) set up a film and video game firm with United Arab Emirates' Aldar Properties ALDR.AD and a UAE media company, with the parties investing $500 million to develop films, and another $500 million on video games. They will also develop a theme park, hotel and cinemas in the Gulf Arab emirate.
In October, Abu Dhabi, capital of the UAE, hosted its first-ever Middle East International Film Festival, bringing together movie moguls like producer Harvey Weinstein and other studio executives with Arab investors.
POLITICS A HURDLE
Veteran media analyst Hal Vogel, chief executive of Vogel Capital Management, agrees that more money is flowing into Hollywood from the Middle East, but said politics could be a hurdle.
"These investors are more serious with oil prices being so high, but it's generally difficult to reconcile the political and cultural base of the region with Hollywood. So I don't know how sticky this money is," he said, citing a recent controversy involving the Israeli film, "The Band's Visit."
The film, about an Egyptian band that gets lost in Israel, triumphed at film festivals around the world, but was banned in Egypt after the Egyptian Actors' Union protested attempts to show it as violation of a cultural boycott they support against Israel.
The union also pressured the Abu Dhabi festival to disqualify its entry, according to the New York Times.
Egypt, once viewed as the Hollywood of the Arab world, produced about 80 films a year at its peak in the 1950s, but cutbacks in government subsidies brought on an industrywide slump that is now attempting to reverse itself. (Reporting by Sue Zeidler; Editing by Jeffrey Benkoe)
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