If only Hollywood and Wall Street were a match made in Washington. That way, should any too-big-to-fail movie fall short at the box office, some too-big-to-fail Wall Street bank could bail out the Hollywood studio that produced it.

But, alas, it doesn't work that way. Studios still bear the risk of their productions or, better yet, find ways to spread it. And very few can handle -- as the Walt Disney Studios did this year with "John Carter" -- a $66 million domestic box office on a movie that cost $350 million to make and market.

Metro-Goldwyn-Mayer Inc., which exited bankruptcy less than two years ago, is not one of those very few. Neither is Legendary Pictures Inc., the film co-financier founded by Thomas Tull after raising $500 million from private equity. However, since both are on the hook for some big-budget productions, Wall Street may soon see its first initial public offering by a studio since DreamWorks Animation SKG Inc. issued common stock in 2004.

All the more so in that most of MGM's equity holders came to their investments as debtholders. They converted, that is, only after a protracted auction to sell the studio failed to deliver a bid they deemed acceptable. So, rather than sanction a fire sale, they elected to have the co-leaders of ministudio Spyglass Entertainment Holdings LLC run MGM. That they became equity holders in the process doesn't mean they suddenly have the stomach for risks much greater than those they assumed as debtholders.

This is especially the case now that MGM plans to re-enter the tentpole business with two potential fourth-quarter blockbusters: "The Hobbit: An Unexpected Journey" and "Skyfall," the 23rd installment of the James Bond 007 series. Yet the front-loaded process of Hollywood investing has already consumed 100% of both productions' film budgets and, before either film actually returns a box-office dollar, will have consumed up to 90% of their marketing and distribution budgets.

Some of Legendary's backers might also be waiting to exit. Founder Tull started putting their money to work after signing a five-year, 25-picture co-financing agreement with Warner Bros. Entertainment Inc. in 2004. The agreement, since expanded to 40 films, is now set to expire in 2013 -- well beyond private equity's traditional investment span of four to seven years. Tull's ambitions, moreover, extend beyond film and into capital-needy areas such as publishing, television and video games.

They extend in film, too, as evidenced by the joint venture Legendary negotiated last year with Huayi Brothers Media Corp., a Beijing-based entertainment company. The JV, which Tull let expire in hopes of obtaining better terms, had planned to produce one or two movies a year in China and, by doing so, skirt the country's annual limit of 20 foreign films. Meanwhile, before Legendary and Warner Bros. even embark on a widely anticipated new deal, they've still a half-dozen additional tentpoles to co-finance. And that's after Legendary put up 25% of the $400 million-plus necessary to make and market the wildly successful and still-in-theaters "Dark Knight Rises."

Lindsay Conner, a media and entertainment partner at the Los Angeles law firm Manatt, Phelps & Phillips LLP, appreciates why the current crop of film investors might choose to exit a risky business made more so by a slumping home-video market. "There's much less margin for error," he says. "Just a few years ago, even a somewhat unsuccessful theatrical release could win back its investment in home video and go on to eke out a profit from TV sales."

The margin today is so slight that the conglomerates housing the major studios are minimizing as much exposure as they can. That, after all, is what allowed Legendary and other co-financiers such as Relativity Media LLC to enter the business. It's also what will allow others not only to join them but, to hear Conner tell it, to join them in droves. "People love show business," he says. "An IPO by MGM would basically give them a chance to own a storied piece of Hollywood."

So it has always been, the lawyer continues, summoning from memory some lyrics to a 66-year-old song by Irving Berlin: "Angels come from everywhere with lots of jack, and when you lose it, there's no attack. Where could you get money that you don't give back? Let's go on with the show."

Richard Morgan covers media for
The Deal magazine.