As the credit bubble peaked in early 2007, private equity and hedge funds had more cash than they could readily invest. That year such alternative investors turned their attention to Hollywood, helping to create a minibubble in movies. There were 590 Hollywood releases that year, 20 percent more than the average for the preceding five years. Veteran Hollywood banker John Miller of JPMorgan Chase & Co. wasnt tempted, though. At one point, a senior executive called Miller from JPMorgans New York headquarters and asked why the bank wasnt riding the new wave of film finance. Miller, now vice chairman of JPMorgan Securities, recalls why he passed on the opportunities. There was a lot of money flowing to Hollywood, he says. It was the kind of market where investors were probably being told they would receive 20 to 30 percent returns.
It was a wise decision. Alternative investors havent fared well in film. With the exception of a few transactions, a great deal of money was lost, says Miller. Miller, whose career in banking goes back to 1968, has always focused on the senior portion of the capital structure, avoiding risky credit opportunities despite their potential for bigger payoffs.
Such judgment has made Miller an institution in the movie business for more than 30 years. At 62 hes among the most senior and seasoned film financiers. John has the absolutely No. 1 reputation in Los Angeles as an entertainment banker, in terms of his knowledge, history and experience, says veteran movie producer and director Joe Roth, who is currently a producer at Sony Pictures. Those of us who have banked with him rarely go anywhere else.
Miller announced in June that he was stepping down as head of JPMorgans entertainment industries group, based in Century City, California. Although staying on in a consultative role, hes turning over leadership of the practice to 37-year-old protégé David Shaheen, who has been with the bank for 15 years. The transition is expected to be completed by the end of the year. David is one of those rare, well-rounded, really grounded and smart people, Miller says. Hes got the right credit and internal management skills, and I expect him to be in this position for 20 to 30 years.
Miller brokered almost every major deal in film and entertainment of the past few decades, including the $812 million IPO of DreamWorks Animation SKG in 2004 and the $4.8 billion sale of MGM to Sony Corp. of America and its equity partners in 2005.
Miller says he loves the movie business, but he avoids the Hollywood limelight. His image is polished but not flashy. At 6-foot-6 and impeccably dressed, he is well known on the power lunch circuit. But he doesnt go to the Oscars. You have to know you are the banker, not the movie star, producer or director, he says.
A Hollywood native with roots outside the movie industry his father was an electrical engineer and his mother a homemaker Miller began his banking career at Union Bank of California after getting a finance degree at the University of Arizona in 1968. With fond memories of watching movies like Giant (1956) with his mother when he was a child, Miller gladly stepped into film finance with JPMorgan predecessor Chemical Bank in 1972.
This year such banks as Deutsche Bank and Dresdner Kleinwort have cut back their film financing activities. Miller says the credit crunch has made it more difficult to finance entertainment, because banks arent as willing to put capital into the industry. But JPMorgans film business remains relatively strong.
In June, Miller led the $189 million IPO of New Yorkbased television movie producer RHI Entertainment. The following month he arranged a $340 million revolving credit facility for Lions Gate Entertainment Corp., an independent studio based in Santa Monica, California, and Vancouver, British Columbia. It was oversubscribed, raising more than $400 million at LIBOR plus 2.25 percentage points, a rate more favorable than the five-year-old structure that it refinanced. We closed this large facility even in todays gruesome credit market, says Lions Gate vice chairman Michael Burns. This shows John and his teams ability to transact business in both good and tough markets.