The producers plan to invest hundreds of millions of dollars in new movies, using money raised before financial markets collapsed last year to profit from the major studios pullback.

“Theres going to be fewer movies but also fewer companies to finance them,” said former Warner Bros. executive Philippe Rousselet, who co-founded Vendome Pictures in October with about $185 million from companies including CIT Group Inc. “Thats the main thing that makes the timing good for us.”

Major studios are retrenching as DVD sales decline and credit for future production tightens. Time Warner Inc.s Warner Bros., Viacom Inc.s Paramount Pictures, Walt Disney Co. and Lions Gate Entertainment Corp. have said they will make fewer movies to concentrate on those with the best chance of profit. Thats created opportunities for others to step up.

Rousselet and Vendome co-founder Fabrice Gianfermi began raising money in 2007. Their investors include RBS Greenwich Capital and Newbridge Film Capital. Others with money to invest include producer Michael Cerenzies Cerenzie-Peters Productions, which has raised more than $200 million, and Ken Johnson, a private investor whos putting $50 million of an inheritance into independent movies through his Initiate Productions.

“The underlying economics of the film business are still pretty good,” said Ken Schapiro, managing partner at Qualia Capital LLC, a New York-based investment firm that focuses on media and entertainment.

Production Schedule

While U.S. home-video sales have dropped, ticket sales have increased. As of March 1, box-office revenue this year has increased 17 percent to $1.79 billion from $1.53 billion a year ago, helped by a 16 percent jump in attendance, according to Los Angeles-based researcher Media By Numbers LLC.

“There have been people who come in to invest in the motion-picture business without really a strong grasp on the risks involved in the business, or an understanding of the various revenue streams,” Schapiro said. “You dont know which landmine youre going to hit, but if you have an idea that theyre out there, youre going to have a better chance.”

Rousselet, who produced “Lord of War” starring Nicolas Cage and at Warner helped oversee films including “Falling Down” and “Under Siege,” plans to develop three films a year at Vendome in the $25 million to $30 million range.

The company, which has a distribution agreement with Summit Entertainment LLC, hasnt announced any titles and will move slowly, Rousselet said.

“You need to be very cautious and therefore more patient,” Rousselet said. “You also need to be more selective on the movies you put through the slate. I have to deliver the volume of movies, but at the same time the numbers have to make sense.”

The number of films produced by major U.S. studios will likely drop 5 percent to 10 percent from the estimated 120 to 130 last year, according to Larry Haverty, a fund manager at Gamco Investors Inc. in Rye, New York.

Cerenzie-Peters, co-founded in 2007 with producer Christine Peters, raised equity financing in Switzerland, Japan and India. The company has a “first-look” agreement with Paramount, which means the studio gets first choice on whether to distribute or co-finance the companys films.

“I look at it as a bull market,” Cerenzie said in an interview. “We did our homework and got on the ground early and were able to structure some of these deals ahead of time.”

Films in pre-production at Cerenzie-Peters include “Black Mass,” a tale about a mob scandal in the FBI to be directed by Oscar nominee Jim Sheridan, and a biography of actor Steve McQueen. The company is buying rights to novels, video games and Asian manga books, Cerenzie said.

The company plans to make films that cost $20 million to $30 million, Cerenzie said.

Stay Cool

Ken Johnson, though his Initiate Productions, plans to invest in films in the $5 million to $10 million range. He already has financed the comedies “Manure” and “Stay Cool,” both from brothers Michael and Mark Polish.

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