Disney taps funds to finance movies

  • Business
  • Saturday, 24 Sep 2005

LOS ANGELES: Walt Disney Co, whose film unit said it will lose money in the fourth quarter, raised US$505mil from investors to reduce the risk of financing movies, the first time it has done so in almost a decade. 

The venture would cover 40% of the production and distribution costs for about 32 films over the next four years, said Natacha Rafalski, vice president of corporate finance at Burbank, California-based Disney. The partnership will share 40% of the profits, including box-office and video sales. 

The deal guaranteed Disney distribution fees and 60% of the profits, company spokesman David Caouette said. Disney said last week its film unit would have a fourth-quarter loss of as much as US$300mil. 

Robert Iger, who next month succeeds Michael Eisner as chief executive officer, said in August that Disney will take a “very hard look'' at film expenses. 

“The cost of movies is so great that sharing a little risk is not such a bad idea,'' said Vic Hawley, a fund manager at Los Angeles-based Reed, Conner & Birdwell Inc, which owned 2.6 million Disney shares at the end of June. – Bloomberg  

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