Trump's Pick For Treasury Secretary Has Strong Ties To Hollywood
AUDIE CORNISH, HOST:
Donald Trump's choice for treasury secretary may be most readily known for the 17 years he spent at Goldman Sachs. But for the last decade, Steve Mnuchin worked in Hollywood financing box office hits like "Avatar" and "X-Men."
Now we're going to talk with Erich Schwartzel. He's a reporter who covers the film industry for The Wall Street Journal. He joins us from our bureau in Culver City. Welcome to the program.
ERICH SCHWARTZEL: Thanks for having me.
CORNISH: So how did this Wall Street financier end up in Hollywood?
SCHWARTZEL: Well, he took a path that a lot of Wall Street financiers have taken over the past decade. When he's looking for investments, he decided to put some of his money in what they call slate financing deals, which are these investments in a slate of movies at a particular studio. So he would put in money to titles, like you said, like "X-Men" or "Avatar." And then if the movie hit, he would make a windfall, and then if it flopped, he would lose his money that way, too.
He initially started with a deal at Fox where he was putting money behind releases like the "X-Men" series and the "Planet Of The Apes" resurgence. And the one movie that he put money in that really hit big was "Avatar."
"Avatar" set records at the worldwide box office. But whenever it was being made, it was seen as this massive risk for 20th Century Fox. It cost hundreds of millions of dollars to make, and it was really uncertain how people would respond. So the studio turned to private equity investors like Steve Mnuchin to offset some of their risk. When Avatar made nearly $2.8 billion worldwide, he was able to reap the benefits of that.
CORNISH: What kind of connections could Mnuchin bring into the fold of a Trump administration?
SCHWARTZEL: Well, he's certainly worked with two of the major studios out here. He worked with 20th Century Fox initially and then with Warner Brothers, which is owned by Time Warner Inc. So he's definitely got some connections on some of the biggest back lots in Hollywood.
He also has worked with Brett Ratner, who is a director known for movies like "Rush Hour," and Brett Ratner's business partner, a guy by the name of James Packer who is a billionaire from Australia who has a lot of holdings primarily in resort and casinos. Those two men joined forces with Mr. Mnuchin and back in 2013 to create an entity called RatPac-Dune Entertainment. And that is what's been sort of the vessel for a lot of the investment we see in the Warner Brothers movies that are coming out now.
CORNISH: There have been a lot of conversation in the last couple of weeks about Donald Trump and his business interests, potential conflicts of interest going forward. Do you see anything like that for Mr. Mnuchin?
SCHWARTZEL: It's hard to say, but I do think that his time probably on Wall Street and in more traditional finance might pose those potential conflicts rather than his work in Hollywood. Although it does seem to me that Donald Trump, for all his experience in show business, now has a cabinet official who has even more contacts and an even deeper Rolodex in Hollywood.
CORNISH: That's Erich Schwartzel. He's a reporter for The Wall Street Journal. Thanks for speaking with us.
SCHWARTZEL: Thank you.
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