The big movie studios, all part of large conglomerates, should never be wanting for cash. After all, they are owned by large corporations and a trip to the financial departments of Viacom (VIA) or General Electric (GE) should do the trick nicely, one would think.

Actually, that is not the case. Most Hollywood productions need barrels of money to finance production as well as a few extra dollars to market the film once it is produced. Film production budgets range from $20 million to $180 million.

According to an article in American Banker, between 65 percent and 75 percent of a film slate's total financing is borrowed by studios and third-party financiers. As it turns out, many of the studios borrow the money from the bank. JPMorgan Chase (JPM) is a big financier preferring bank-like loans with lower interest and lower risk.

Hedge Funds have been getting into the act, lately. Relativity Capital and Universal just announced a deal where Relativity will finance about 75% of Universal's slate until 2011. It will get to review many artistic features of a film - actors, directors, producer - and stand shoulder to shoulder with the studios in green-lighting production.

So these new alternative investors have cracked into the most exclusive club of them all - Hollywood. But not everybody is coming up roses. An LA Times article talks about the downside that some hedge funds have experienced. That extends to a personal level sometimes. Financier Ryan Kavanaugh, who organized the Relativity deal, once lost $750,000 trading options in one day. (And I think I have it bad when my position goes down $750). Whew.

The next frontier will be user-based financing of films. Somebody has to defend freedom of artistic expression.