Hollywood’s Paramount rule

livemint.com:

The first rule of Hollywood: Never spend your own money. Ask David Ellison, who learned the hard way with his mostly self-financed 2006 film “Flyboys" starring James Franco and, yes, David Ellison. It cost $60 million to make and did under $18 million at the box office.

He told me he’d never do that again. Now 41, an avid pilot and son of $172 billion net worth Oracle founder Larry Ellison, Mr. Ellison is set to take over the storied Paramount studio (maker of films from “The Ten Commandments" to “The Godfather").

After the 2008 financial crisis, studio financing dried up. Mr. Ellison, then in his late 20s, figured he’d raise several hundred million from outside investors for a film fund.

He could have written a check himself, but he understood Hollywood’s first rule. I was in the room in those early days. A mutual friend, Andrew McKenna, who flies P-51 Mustangs and is now a Wall Street hotshot, helped negotiate a film-financing deal with Paramount Pictures—no easy task—and asked me to get involved.

David Ellison was smart and focused. His company, Skydance Media, was based in a hangar at Santa Monica Airport. I’d often see Harrison Ford stroll by.

I contemplated becoming chairman and was even the first investor in the fund. I also was the first to get thrown out. Mr.

Ellison’s idea for Skydance was to fund only action and sci-fi films—movies with explosions! He swore to me: No rom-coms. No touchy-feely emotional Oscar bait. He’d only fund surefire box-office winning categories, including animation.

Hollywood is all about capital efficiency. Yes, studios also know that first rule and try to limit investing their own money. They often use outside capital to help fund productions, which is why you see logos such as