Show goes on in Hollywood amid economy jitters

By Sue Zeidler

LOS ANGELES (Reuters) - Cameras are rolling and money is flowing, despite a few fears in Hollywood that the current global economic turmoil could cut TV advertising and dry up some film financing.

"It's not like people stop consuming entertainment. That's not happening. No individual is immune to a world financial crisis, but people are still watching TV and buying movies," said Michael Burns, vice chairman of Lions Gate Entertainment, who said DVD sales were strong and it was "business as usual" at the studio behind films like "Religulous" and "W".

Executives from two large Hollywood studios said their companies would cut down on travel and promotions due to market conditions. DreamWorks will delay pitching Wall Street for loans, and broadcasters are concerned that advertisers might buy fewer spots if fewer people are buying their wares.

Media stocks have slumped with the market collapse, mostly weighed down by fears about broadcast advertising.

But no studio said it would cut or delay film production, and many said they were not cutting costs like travel.

"We are always looking at our businesses and the best and most efficient ways to run them. At this point we are not doing anything differently," said Scott Rowe, a spokesman for Time Warner Inc's Warner Bros, which is proceeding with six films, including the next "Harry Potter" installment and the Clint Eastwood-directed "Human Factor."

In fact, billions of dollars in films are set to go ahead in coming months by Warner, Walt Disneu, Viacom Inc's Paramount, News Corp's Twentieth Century Fox and General Electric's Universal, after the industry put much output on hold since late June amid fears of a strike by the Screen Actors Guild (SAG).

SAG and the studios are locked in a three-month-old battle over payments for work delivered online on the heels of a 14-week walkout by screenwriters that ended in February.

While many studio executives believe the deteriorating economy will discourage actors from striking, saber rattling continued this week with SAG saying it was confident its members will support authorizing a strike against studios.

Despite the gloomy economy and strike threat, the prospect of not having films to show audiences is even scarier to studios, which is why they are now shooting films slated for 2010 and 2011.

FILM FINANCING CONTINUES DESPITE WALL STREET CHAOS

Several film-related finance deals have closed in recent weeks even as the chaos on Wall Street has unfolded like an epic disaster flick.

JPMorgan, considered the entertainment industry's top banker, is involved in three recently announced film-related deals, including India's Reliance ADA Group's venture with Steven Spielberg's DreamWorks SKG.

JPMorgan, which is putting up about $125 million for DreamWorks, hopes to raise about $600 million more from other lenders, but has delayed that pitch due to the market, a person briefed on the matter said. The person said delaying the request for funds was simply the prudent thing to do.

JPMorgan also closed a $350 million credit facility for studio Media Rights Capital, maker of a new Cameron Diaz film, and led a long-sought $1 billion multi-studio deal to finance the digital upgrade of 20,000 U.S. and Canadian cinema screens, so that theaters can show more 3-D films for higher prices.