Banking On The Stars

By Daniel Kadlec

A bond can be secured by any dependable stream of revenue--corporate earnings, tax receipts, mortgage payments, Bag of Bones royalties. Bag of Bones? Well, yes, not to mention Carrie, The Shining and The Green Mile. You see, Wall Street financier David Pullman, who in 1997 rocked investors with "Bowie bonds," backed by royalties on the songs of David Bowie, is planning to create securities based on the earnings of authors. And while Pullman won't name the writers he has approached, may we suggest that a Stephen King bond would be an excellent investment opportunity?

Here's how it would work if, for example, Pullman issued $100 million worth of King bonds. The money raised, minus commissions, would go directly to the fright master himself in the form of a loan. That means, Mr. King, that it won't be taxable income. Investors who buy the bonds would get the principal back over about 10 years, plus perhaps 8% annual interest, from King's royalties. Need references, Mr. King? In the past three years, Pullman Inc. has announced deals involving more than $200 million worth of bonds secured by the works of not only that Ziggy Stardust guy but also James Brown, Marvin Gaye, the Isley Brothers and Motown songwriter trio Edward and Brian Holland and Lamont Dozier.

The business of "asset-backed" securities had begun getting creative long before the deal with Bowie. Britain's Punch taverns managed to float bonds collateralized by future beer sales. But no one had aced the intangible realm of intellectual property. Pullman foresees the securitization of everything from patents to screenplays.

A potential cloud over his hit parade is the Napster phenomenon. If people can get copyrighted material for free off the Internet, the bonds will be less valuable. But Pullman, 39, is confident that the entertainment and publishing industries will find some way to keep collecting money for their artists' work. His bigger problem may be maintaining his lead in selling Bowie-style bonds. He's in a legal battle with Prudential Securities and a company run by music-industry veteran Charles Koppleman, whom Pullman charges with trying to steal his ideas.

The New York City native, captain of his high school cross-country team and still a runner, intends to stay in his new business for the long haul--and keep moving it into new fields of artistic endeavor. "I would be bored doing something that's cookie cutter," Pullman says. To which the Isley Brothers might respond, "It's your thing. Do what you gotta do." Do you hear the music, Mr. King?

--By Daniel Kadlec