Vertical Integration?

ABC and CBS have been experimenting with vertical integration, as more network-affiliated studios have been selling to other broadcast networks.

ABC just committed to a CBS comedy, as CBS is trying to sell shows to other broadcast networks. For example, it has set up an untitled comedy at ABC , which revolves around a two sisters. In fact, many of the successful shows at large networks hail from other studios, like Warner Bros TV, 20^th TV, and Sony TV. 

With these changes, it seems that vertical integration is not temporary, but in fact here to stay. Do you think its influence on networks' decisions  is beneficial or harmful?

http://www.deadline.com/2013/08/blurring-the-lines-on-vertical-integration-network-affiliated-studios-agressive-in-selling-to-other-broadcast-networks/

Update in Time Warner and CBS negotiations

Three LA-area customers have hit Time Warner Cable with a class action suit over the CBS blackout. The plaintiffs seek subscription fees and reimbursements on behalf of fellow Time Warner subscribers affected by the blackout. In the complaint filed yesterday, they claim unjust enrichment, breach of contract and more. Plaintiffs are also arguing that they received no notice of the blackout and that Time Warner has not offered credits in light of what has happened.

No word from Time Warner on the case.

http://www.deadline.com/2013/08/time-warner-cable-class-action-cbs-showtime-blackout/

One small step for studios, one big leap for Hollywood films? China Film Group to pay studios over $200mil in previously disputed past-due film revenue

Let's face it, we all know China is the new frontier.  Film's "gold rush."  But historically, Hollywood films have run into near-debilitating roadblocks to accessing the billions of dollars in revenue that would come from the billion or so potential movie-goers in China.  At first, the problem was censorship.  Nearly 40 minutes of the film Cloud Atlas was cut to exclude both gay and straight love scenes.   In the film Skyfall, a scene that took place in a Shanghai skyscraper that included the assassination of a Chinese security guard was taken out.  And the famous scene in Titanic where DiCaprio sketches the near-nude Kate Winslet was modified to focus in on just her back and shoulders, for fear that in the 3-D viewing, audiences may be tempted to reach out and touch her body.  I'm not making this up.  The State Administration of Radio, Film and Television said so in an official statement.

Cut to today, where censorship remains a major hurdle, stemming in part from the Chinese government's fear of American propaganda penetrating its masses through glorious, fascinating images and stories.  Clearly, there is an acknowledgment of the power of film.  But it wasn't until China realized they, too, could influence its population through subtle and oft not-so-subtle modifications to US films distributed through China, that the country began to lax some of the roadblocks studios were facing.  Or maybe it came down to the usual: money. 

As of 2012, China allows 34 foreign (mainly U.S.) films (previously only 20) to receive theatrical distribution in China, and this distribution is via only 2 companies, China Film Group and Huaxia Film Distribution, both of which are state-owned.

Today, studios receive a fixed 25% of net box office sales in China (up from between 13% and 17% before 2012), and the Chinese distributor pays all taxes and P&A costs.

This 25% that studios are entitled to, per a 2012 memorandum of understanding between the U.S.'s Vice President Joe Biden, and China's president, was not paid to U.S. studios, for films including Skyfall and Life of Pi, a number reported by Variety to possibly be over $200 million.

This $200 million only reflects revenues from March/April until now.  And the Chinese market continues to grow, up 36% to roughly $1.79 billion this year alone to-date.   Yet imported films fell by 21% to $670 million.  Why do you think this is?

September, Chinese audiences can expect to see films such as Jobs, Smurfs 2, The Lone Ranger, and Elysium.  I'm curious to see how China will censor the Smurfs movie.

**figures obtained from Variety

Hugh Douglas Leaves ESPN

ESPN has split with Hugh Douglas, co-host of Numbers Never Lie over a racially charged altercation. He allegedly had an altercation with co-host Michael Smith and screamed racial slurs at him. He tweeted his leave from ESPN yesterday morning. 

http://www.deadline.com/interstitial/?ref=http%3A%2F%2Fwww.deadline.com%2F2013%2F08%2Fespn-fired-hugh-douglas-uncle-tom%2F

Spike Lee Passes $1 Million in his Kickstarter Campaign

Spike Lee’s Kickstarter campaign for his project about people’s addiction to blood has surpassed $1 million, nearing his goal of $1.25 million. Donors who give $10,000 get a day on set filming and a day editing with Lee himself. 

http://www.hollywoodreporter.com/news/spike-lees-kickstarter-campaign-passes-604952

Jumpstart Our Businesses Startup Act

The effects of the Jumpstart Our Business Startups Act that President Obama signed last April shall be seen on September 23^rd. The act lifts some restrictions off businesses, essentially paving the way for equity crowdfunding. Filmmakers will even be able to set their own rules for their projects. The rest of the provisions will go into effect in 2014 and will allow for unaccredited investors to participate as well. 

http://www.hollywoodreporter.com/news/forget-kickstarter-how-obamas-new-600233

Tim McGraw Has Gotten His Former Label’s Copyright Lawsuit Dismissed

Curb Records had claimed rights to the singer’s most recent album after he released it early. The U.S. district judge claimed that McGraw has certain rights to his recordings and decided to let the state judge’s opinion stand.

http://www.hollywoodreporter.com/thr-esq/tim-mcgraw-gets-labels-copyright-604232

Crowdfunding Evolution

Although not yet a legal term found in the books or the dictionary, “Crowdfunding” has surely become one of the most popular phenomenon in the United States today. It has drawn so much attention over its short history because crowdfunding was started to support charitable causes for social issues such as homelessness, poverty, and education. But over the past two years, not only has crowdfunding sparked the qualities of hope and compassion in our society toward these issues; but it has also provided a platform for entrepreneurs to raise capitals for businesses. In fact, according to Massolution – a crowdfunding research firm, $2.7 billion were raised in 2012 alone to fund more than 1 million campaigns. Furthermore, Massolution also predicts that crowdfunding efforts could increase up to $5.1 billion dollars worldwide in 2013.  

I think it’s safe to say that the phenomenon of crowdfunding has become an actual business industry to look out for. But like every other dynamic change in the business world, new invention means new regulations. Crowdfunding has certainly met its challenges over the past few years, and the adjustments are not quite over yet.

Just over a year ago, Obama signed a legislation called the JOBS (Jumpstart Our Business Startups) Act, which aimed to allow small business to access capital easily and to generate more jobs. Prior to the JOBS act, crowdfunding was restricted to businesses and entertainers that accepted donations in exchange for perks such as t-shirts or autographed posters. This was what made crowdfunding projects such as the “Veronica Mars Movie” and Zach Braff’s “Wish I Was Here” so successful; while startup businesses haven’t been as lucky. The JOBS Act entailed provisions that were about to change everything for these startups. That is if the SEC would amend and release its laws first.

Now, after more than a year of waiting, the SEC has officially made an announcement on July 10^th, 2013 to implement The Access to Capital for Job Creators Act, lifting the SEC regulatory ban on private offering advertising. Soon, startups with venture capital funds, private equity funds or hedge funds will be able to market products and stocks through a variety of platforms (such as TV, radio, and social media). Prior to this Act, crowdfunding did not allow any type of advertising except to direct investors to the appropriate broker or funding portal. This act will now allow more transparency for accredited investors to invest in young companies.

Another provision that was placed into effect immediately was The Reopening American Capital Markets to Emerging Growth Companies Act. This law qualifies a business with total gross revenue of less than $1 billion in its most recent fiscal year as an “emerging growth company”, thereby allowing such businesses temporary relief from SEC regulations to go public with their companies.

But regardless of these two changes, there are still concerns that need to be addressed until the SEC rewrites other provisions into new laws. For instance, a company can only raise $1 million in any 12 months period, and the amount of money a person can invest in all crowdfunding efforts in a year is restricted to 10% of his or her annual income or net worth (incomes of $100,000 or more) or the greater of $2,000 or 5% of annual income or net worth (incomes of less than $100,000). In addition, not only do these new businesses have to fill annual reports with the SEC just like the rest, they may also have to file more frequent reports as they complete a crowdfunding round (depending on future SEC regulations). Think about it. Does the burden and cost of taking on the legal liability and comply with so many filing requirements outweigh being able to raise a maximum of $1million dollars a year? Until new amendments have been made to the SEC laws, equity crowdfunding may not be the best option to go with just yet.

Furthermore, crowdfunding must be done through a registered broker-dealer or registered “funding portal.” Since broker-dealers and funding portals are not allowed to solicit investments, give advice, or pay employees based on sales, traditional investment banks have yet to jump on the crowdfunding movement. This has allowed lesser-known institutions with minimal track records to take over the market and facilitate most of the activities, and the idea of working with institutions with little investment track records have become a concern.  

With so many restrictions and speculations that are still up in the air, some companies are actually finding that it is more economically feasible to file for an IPO rather than go through the crowdfunding route.

What are your thoughts on the crowdfunding progress?

Judge Tosses Kevin Costner's Fraud Claim Over 'Robin Hood'

"The actor is fighting over money from the hit 1991 film, but has experienced another setback following the rejection of his claim in February."

Read on http://www.hollywoodreporter.com/thr-esq/judge-tosses-kevin-costners-fraud-603606

Updates: Time Warner & CBS Struggles

Today, the head of Time Warner offered a new deal to CBS. Time Warner would offer CBS but would require an additional fee for customers on top of their monthly bills. This way, subscribers would be the ones deciding whether or not CBS programming is of value to them. CBS has not yet accepted or refused the proposal. 

 

Also, Verizon Fios, Time Warner's competitor, recently stated that it has been receiving an increasing number of Time Warner customers looking to switch their service. 

 

How do you think this will affect Time Warner's overall revenue and leverage in negotiating with CBS?

http://reut.rs/13uJyr4

Time Warner and CBS have yet to negotiate their contract

Time Warner Cable and CBS have recently been in dispute, as they were unable

to resolve their disagreement over the pay increases CBS was demanding. Time

Warner refused to accept the channel’s higher fees in hopes of keeping down their

customers’ monthly bill, resulting in the loss of CBS affiliated channels for their

subscribers. Time Warner also offered a one-year extension of the contract, to which

CBS also refused.

The blackout has also carried over to the internet since Time Warner customers

cannot watch CBS programming online. However, CBS is still available to non-Time

Warner subscribers. In lieu of the channel, Time Warner has stated that it will be

showing Starz Kids and Family and will be crediting the bills of those who subscribe

to Showtime, TMC, and Flix pay channels.

The two companies are currently not in negotiations.

http://www.hollywoodreporter.com/news/time-warner-cable-cbs-refused-598901

Attention: Screenwriters Looking To Get Picked Up

Warner Bros has signed a deal with Franklin Leonard’s “The Black List” to discover under-served screenwriters. Starting from Thanksgiving season this year, five new screenwriters will be recommended by WGA to Warner Bros every six months; one of which will be offered a two-step blind script deal worth approximately $93,000. Leonard said that the program will target certain demographics of writers, including "writers of color and women, but also older writers as well, with pre and early baby boomers […].” On top of this, here’s another catch: the chosen writers cannot have made more than $25,000 from screenwriting in their career, as the idea is to offer chances for new screenwriters to express their voices and ideas. For all the aspiring screenwriters out there, look out! This might be your chance!

Attention: Screenwriters Looking To Get Picked Up

From Iran to Hollywood...Shohreh Aghdashloo's Success

Congratulations to Iranian Actress Shohreh Aghdashloo for her success and recognition in the international film industry! Read more about Shohreh's works on: http://secure.campaigner.com/Campaigner/Public/t.show?5qhxt--2xx7u-asgwse8&_v=2

IMAX Dominating in Movie Theaters

IMAX Corporation has expanded its partnership with both Wanda Cinema Line Corporation, as well as AMC Theaters. The renewal of joint venture with Wanda includes an addition of up to 120 new IMAX Theaters in China, making Wanda the largest international partnership for IMAX. Similarly, AMC’s  (owned by Wanda Group) deal with IMAX includes up to 10 new IMAX theatres in the US, making them the largest IMAX exhibition partners in North America. These new commitments of expansion reflect IMAX’s goals for their development in the next-generation laser projection system, and showcase their confidence in bringing premiere cinematic experiences for everyone in entertainment. 

Read more on: IMAX Super-Sizes Partnership Deals With AMC Theaters And Wanda

Disney Fans, Rejoice!

For all you Disney fans out there...get excited! Walt Disney Records and Amazon have just signed a deal to release out-of print titles and certain Disney classic films. These soundtracks and songs will be released through Amazon's service - CreateSpace. Although the terms of negotiation is not available to the public, we know that there are already 18 titles in the DIsney CD Rarities section on Amazon.com as of now. Now stay in tune, as new titles will be added to the Disney Music Store every month, from the most recent films such as "The Avengers" to classic films from the 90s!

So Disney fans of all ages, you will now have the convenience of Amazon.com to reconnect with your childhood Disney memories, or stay connected with the current Disney music!

Italian Film Industry's Tax Credit Troubles

Back in 2009, the Italian government proposed to implement tax incentive cuts to the cinema industry under a new budget strategy to combat recession. As soon as the news came out, the Italian film industry threatened this new budget law with strikes and protests to protect the major tax credits that supported film productions. At the end, the issue was resolved after rigorous negotiation processes, and tax credits continued to be funded. However, the Italian administration has just announced this year that tax credits for the entertainment industry will not be funded after the end of 2014. Instead of budgeting the tax credit for lower, the administration has decided to eliminate tax credits as a whole. This economic decision was made to help Italy reduce debt, and climb out of the European debt crisis. In fact, as of last year, Italy’s debt was 127% of the entire country’s GDP, making it the second highest debt-to-GDP country in Europe, right behind Greece. Due to this, the Italian government is making wide-range government spending cuts to various industries, including the cinema and television sector.

This decision clearly has implications not only on the Italian films, but also international movies co-filmed in Italy. Italy’s tax incentives have always ben a major attraction for production companies worldwide to film their productions in this country. The original tax credits not only provide up to $6.6 million dollars for every Italian cinema/TV as production costs; but it it also provide up to $4.6 million dollars for co-productions shot in Italy, making the country an idea place for many US films to be made. Just as a few examples, past US filmed that have been co-produced there include The Bank Job, The Tourist, Letters to Juliet, and The Godfather. The elimination of these tax credit will not only take away the appeal for foreign production companies to film in Italy, but it will also result in the fall of production as a whole. Major Italian films that require a high budget will no longer have the support they need, and the reduction of films being made can ultimately lead to an estimate of 2,500 job losses in the near future (including those of distributors and indirectly related positions).

Upon receiving Prime Minister Enrico Letta's  statement on the tax credits elimination, many Italian film associations have responded vigorously to this change. Last Thursday, about thirty film associations- including ANICA, ANEC, AGIS, 100autori Writers’ Association and various unions, have released a statement that threatens to block the Venice Film Festival’s July 25^th conference and all major events if the tax credits is not reinstated by then. They have asked the government to at least provide $118 million funding per year. Despite Letta’s efforts to reassure the industry that the government is committed to locate the tax credits from resources elsewhere after next year, these film associations are looking to be less lenient than they were in 2009.

Changes in Music Consumption

Since Billboard introduced a new formula to determine rankings on the Hot 100 singles chart earlier this year, it immediately made an enormous impact in the music business. Regardless of the backlashes this change received from labels, or the approval from other parties, this change has been a positive influence for many artists; particularly new and unknown artists. Billboard has always been validated as the source to go to for determining top selling music. Their rankings are often where people look at to find out what is popular, and are also how people determine what music to purchase. The formula that generates the rankings, created by Nielsen SounsScan, has traditionally included physical CD sales, digital downloads, radio airplay as well as online radio streaming. But YouTube video streaming data has now been incorporated into this formula, changing the major players that are on top of that list. For instance, for an unknown artists such as Baauer, this updated formula immediately pushed his song “Harlem Shake” to the number one spot due to thousands of YouTube videos generated on this viral song. Similarly, “Gangnam Style” by Korean sensation Psy, which went viral on YouTube with its fascinating dance moves, also jumped to the No. 1 spot on the Rap Songs chart (even though he has not been fully embraced by the American audience as a genuine rapper).

All of this is good news for artists such as Baauer and Psy, who otherwise would not have garnered the amount of attention they needed to top the charts through the traditional platforms. Getting your music on radio and making your name well known often requires a lot of promotional money and marketing efforts from record labels. Billboard charts are therefore often to predict, based on the major labels that are behind the artists on the charts and the type of music they release (generally pop). But this change in the Billboard formula give artists a chance to reach fame even without being backed financially by a record label, or signed to any deal. In addition, it shifts the attention away from mainstream pop and rap, giving other genres, such as indie or country, a chance to climb onto the Billboard chart based on their online audience base. Sure, there are still debates on whether this change in formula really reflects the consumption of music or the money flw in the business. Record labels can possibly manipulate the views on YouTube and generate unauthentic “hits” for their major talents. But the Billboard chart with its with formula is created to reflect what the public is currently listening to on a week-to-week basis, regardless of the actual money it brings in. So if you're a new artist, pay close attention. Billboard might have just provided a new model for you to break into the industry.