PUSAN -- Film execs at South Korea's Pusan Film Festival were given a lesson on Friday in why movie finance has become tougher and why there are still reasons for cautious optimism in Asia.

Referring to the Weinstein Co.'s Asia Fund, which last year raised $285 million, Continental Entertainment Group prexy-CEO Ben Waisbren said, "That deal would not get done today."

This is because Libor, the London-set interest rate that governs what banks pay to borrow money from each other that's often used to calculate the terms of movie finance, has risen from 3.1% to 4.21%. Waisbren said that this had caused lenders to double the premium charged on movie funds from 2% to 4.5%. Continental Entertainment Capital holds senior debt in the fund.

Waisbren explained that a few years ago the growth of DVD and foreign revenues made movies look like a growth sector. But he warned against using historical data and explained that by the time movies made to address that demand reached the screens, the market had changed.

"You'll end up with too many movies," he said. "That's why you have seven movies on wide release this weekend (in North America)."

Yasushi Kotani, head of Japanese producer and investor Entertainment Farm, said that while film funds have not exactly taken root in Japan, they represent a useful alternative to the country's often cumbersome system of production committees.

These see producers, distributors and even marketing agents all put up equity capital equal to a pic's budget. Entertainment Farm was a backer of the recent "Tokyo Sonata" and Wayne Wang's "1,000 Years of Good Prayers."

Kim Hyun-woo, of Korean venture capital firm Boston Investing, said that the global financial crisis had forced his company to scale back movie sector funding, but said also that Boston was planning two more content funds.

"It is often darkest before the dawn," he said. "We have seen Korea become an IT powerhouse and we believe that the growth engine over the next 10 years will be content."

Nan Shi, producer and managing director of recently created production fund Irresistible Films, pointed out that the West's situation did not apply in China, where 30% annual B.O. growth is propelled by massive multiplex building and the slow reduction of restrictions on filmmakers.

Shi said that distribution models would have to evolve. "I believe in the Internet. It is both our poison and our possible hope."