05/27/2008 05:12 am ET Updated May 25, 2011

Filmmakers Struggle As Private Equity Funds Dry Up

Last September, when Sanjay Sanghoee set about turning his first novel into a Hollywood movie, the budding filmmaker had his pick of investors.

The novel, "Merger," a corporate thriller with an international espionage twist, was quietly published in 2005. Mr. Sanghoee saw the movie version as a $5 million to $7 million indie with broad appeal, maybe attracting a star like Jake Gyllenhaal.

But so many hedge funds and private equity investors wanted to sink money into the project that Mr. Sanghoee, himself holding down a day job at a New York hedge fund, pushed the needle higher. Soon the budget had tripled to $15 million. In October, he decided against a fund-raising trip to Dubai. "We don't even need it now," he said in an interview at the time.

But that was before Wall Street's mortgage mess, tight credit markets and the sour economy -- and before a parade of poor box-office results for investor-backed films.

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