Remember a while back when I told you about the pending approval for two markets where people could buy Box-Office Futures — which would allow you to place stock bets on box-office returns?  Yeah, so it’s starting to look like that’s a no-go. 

A U.S. Senate committee on Wednesday passed a financial regulatory reform bill that supports Hollywood in outlawing the trading of futures contracts based on predicted movie ticket sales. The bill was backed by Democratic Senator Blanche Lincoln, the chair of the committee.
The Motion Picture Association of America applauded the committee’s work. It has called such proposals a form of legalized gambling. [AP]

Pretty much any business is a form of legalized gambling, so that’s a kind of a stupid argument.  Not to mention that legalized gambling is awesome.  Anyway, my first reaction to this was to wonder why the MPAA would care about box-office futures, especially when they were first pitched partly as a way for studios to hedge their own bets.  And why would congress be worried about this and not all those banks we gave billions of dollars of interest-free loans to who turned around and lent the money back to the government at 3% interest?

But further reading shows that this is actually a provision in a larger regulatory bill, the Wall Street Transparency and Accountability Act financial reform package.  So I guess that’s okay.   As screwed up as Hollywood is now, things rarely improve by letting slimy Wall Street a-holes come in and cornhole each other via Blue Tooth (I saw it in that movie, Ball Street).  As long as this trivial stuff isn’t just a way to look busy while avoiding any actual reform.  I know how that works.  I’ve had real jobs before.

Next month, two companies are starting markets for “Box-Office Futures”, which will soon allow investors to bet on whether a movie will be successful the same way they can now bet on whether the entire economy will collapse because your cousin kept giving million dollar home loans to street musicians.

Contracts on the Cantor Futures Exchange, a subsidiary of Cantor Fitzgerald, will trade at $1 for every $1 million a movie is expected to bring in — a figure determined by traders — at the domestic box office during its first few weeks in theaters. So if “Robin Hood” is expected to bring in $100 million in its opening weeks, a single contract could be bought for $100 by a trader who thinks Russell Crowe’s role in the movie will drive sales far above expectations. If that trader guesses right, and the movie sells $150 million in tickets, the trader makes $50.

Mr. Jaycobs said the metric used — domestic box-office receipts — “is as simple as it can possibly be.” He hopes the business will also attract professional and institutional investors. If a movie distributor, for example, screens a movie it has backed and thinks sales will beat expectations, the company can take an even bigger financial stake in the movie by buying contracts for it.

As in other futures markets, investors will also sell — or “short” — contracts. If a distributor thinks a movie it is backing will struggle at the box office, the company can sell contracts in the futures market. If the distributor shorts a $100 contract and the movie grosses $50 million, the distributor will make $50, thereby limiting the company’s total losses from a film.

Conflict-of-interest issues are handled by limiting the amount a company can hedge through the exchange, so that a distributor could never make more money by betting against a film through futures than by having that film succeed in theaters.
These new markets, she said, present Hollywood investors with “an opportunity to acquire a contract to minimize the downside risk.” Or, she said, “you can double down on an investment that you think is going to do well.” [NY Times]

Ironically, one of the first films for which people will be allowed to purchase futures is Disney’s Short Seller, starring Danny DeVito and Dwayne The Rock Johnson, about a little investor who meets a struggling genie, and in the process learns the value of optimism.

*sigh* I guess I have to do a post about this.  Parent company Time Warner has consolidated New Line Cinema and Warner Bros.

As an example of lost revenue opportunities, New Line’s "The Golden Compass" made $70 million domestically through Feb. 24 but raked in $261 million abroad, from which the studio saw limited benefit because it had to sell those distribution rights to various other companies. The Warner Bros. international network will allow Time Warner to reap such sales directly.

Hmm, perhaps that’s why they were stiffing the Tolkien estate on that little matter of the 7.5% of six billion they owe them.  Allegedly.

New Line has several potential hits in production, such as the next film in the "Lord of the Rings" series, "The Hobbit," which is set for release in 2010 [and totally up in the air], and "Sex and the City: The Movie" due to hit theaters in May.

I don’t know what this means for the movie industry, but I’m sad that I’ll probably never get to use my zingy one liner, “New Line Cinemas, ha, more like Jew Line Cinemas!”   I’m so edgy!