The risk environment of film making: Warner Bros in the inter-war years

This paper examines the financial strategies employed in the process of film production with particular emphasis on the performance of Warner Bros during the period from 1921 to 1940. The setting of film budgets is interpreted within a context of the financial risks involved, and in particular, a portfolio theory approach is found to provide a useful framework for describing and analyzing risk. The rapid growth of the film industry in the interwar years, together with the economic volatility of the period, produced a variety of risktaking strategies, and this paper attempts to assess the relative success of these strategies.