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ENTERTAINMENT LAW OVERVIEW COURSE AT SCC
I am very proud and excited to announce that I will be teaching an on-line course on Entertainment Law through Scottsdale Community College! The course will begin in the Spring Semester with classes to begin in January of 2011. The course will give an invaluable overview of Entertainment Law and the issues that confront young filmmakers.
ARE ONIONS THE FUTURE OF HOLLYWOOD IN THE "FUTURES" MARKET?
In a recent New York Times article, "Trading in Fantasy", Felix Salmon wonders whether the recent fate of ONIONS could portend the future of Hollywood.1 Hollywood is hoping to gain an exemption in the "futures" market for the motion picture industry. But what the heck do onions have to do with the entertainment industry? Here's how - the "futures" market deals with commodities: corn, oranges, onions. It is used to "hedge" risk and manage loss; it also helps to control prices. Onion farmers were upset by low prices. The farmers argued for an exception in the "futures" market. The result was not steady, higher-prices. Instead, "onion prices remain extremely volatile: they doubled in 2008, and then fell by 25 percent in 2009."1
The Commodity Futures Trading Commission recently approved a plan to allow trading futures contracts based upon box-office revenue.2 Media Derivatives Inc. will be allowed to offer futures and option contracts based on the box-office revenue of the film "Takers". Hollywood, almost reflexively, continues to fight back. It wants to add to the clause that excepted onions ("except onions") to now read "except onions and motion picture box office receipts".
The Motion Picture Association of America argues that "the new market could (i) tarnish 'the reputation of our industry' and (ii) would constitute 'unbridled gambling. . . .'" What industry are they referring too? The industry is a self-caricature of itself (e.g., Sunset Boulevard; The Day of the Locust; Sweet Smell of Success; The Player). Regarding "gambling" - I hear Captain Renault shouting "shocked, shocked to find out that gambling is going on here!" Every picture that is "green lit" and enters the market is a gamble!
Mr. Salmon points to Lionsgate Films as an studio that has understood the advantages regarding managing risk and loss through these type of contracts and what that can bring to the bottom line. Mr. Salmon also points out the economic benefits from a simple, regulated, market.
Please keep on eye out as we will continue to post updates on this issue.
1 "Trading in Fantasy", Felix Salmon, New York Times, Monday, May 10, 2010, OP-Ed Pg.
2 "Trading Film Futures Contracts Approved", Michael Cieply, New York Times, Tuesday, June 15, 2010, B-3.
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