Big screen battle: Hollywood vs. box office speculators
The film industry is fighting proposals to create a 'futures exchange' for investors speculating on Hollywood box office profits and losses. No word yet on who has the screen rights.
The eleventh-hour pushback by the movie industry and Congress appears to have worked.Skip to next paragraph
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Two firms, one from New York and the other in Chicago, have been pushing in recent months for approval of a futures exchange that will allow investors to speculate on Hollywood box office profits and losses as they do about the future prices of orange juice and pork bellies.
But the ruling – which was due Friday afternoon according to David Gary of the Commodities Futures Trading Commission (CFTC) – will be held another week. The request by Chicago-based Veriana Networks, deals with an exchange that would be open only to institutional investors. Another, by New York-based Cantor Fitzgerald, would be open to anyone.
Movie industry vigorously objects
National debate has heated up in recent weeks because the Motion Picture Association of America (MPAA) objected vociferously to the idea and began to enlist others – including the Directors Guild of America, the Independent Film and Television Alliance and the National Association of Theater Owners – to urge the CFTC to deny requests for the exchanges.
California’s US Senators, Barbara Boxer and Dianne Feinstein, also urged caution by the commission, as did US Representatives Lamar Smith of Texas, Robert Goodlatte of Virginia and Henry Waxman of California.
The “contract market is not warranted where, as here, its sole purpose is to provide a trading platform for instruments that do not constitute legitimate futures or option contracts,” said the letter sent by the MPAA coalition. “But [they] are in essence wagers that are susceptible to manipulation. Rather than providing a real and useful means for hedging risk or price discovery, these instruments will be harmful and burdensome to the motion picture.”
The letter charged that establishing online box office wagering marketplaces will be “detrimental to the industry they ostensibly are created to serve.”