Breakthrough in Teamsters talks; deal ratified
Union members voted 97% in favor of last offer from studios
July 25, 2010, 02:00 PM ET
Updated: July 25, 2010, 07:39 PM ET
The union blinked -- but for the right reasons.
In a surprising reversal, Teamsters members agreed Sunday morning to the "last, best and final" offer from studios, averting a strike by Hollywood transportation workers and others.
Teamsters head Leo Reed, in a standing-room-only membership meeting in Burbank, asked the members present to vote for the deal, conceding on a major wage point in exchange for relatively minor enhancements that were achieved in backchannel negotiations Saturday afternoon.
Upon Reed's recommendation, the union membership voted 97.3% in favor of the deal, about 840-20.
Talks between the union and the Alliance of Motion Picture & Television Producers, representing the studios and independent producers, ended Friday night with no movement and no new negotiating sessions scheduled.
"It's a good contract," Reed told THR. "I'm very happy."
Members at the meeting appeared happy as well, repeatedly applauding most deal points and thanking Reed and his team. Only one person, union activist Gary Watts, rose to speak against the pact.
The AMPTP also praised the deal. In a statement released Sunday afternoon, the studio organization said: "We wish to thank Secretary-Treasurer Leo T. Reed and the rest of the leadership at Teamsters Local 399 for working with us to resolve some difficult issues so we could reach an agreement that keeps everyone working. The newly ratified agreement provides solid increases in wages, benefits and work opportunities for members of the Hollywood Teamsters while recognizing the economic realities that continue to challenge the industry."
Terms of the two-year deal include an annual 2% pay increase, which is a concession since the union wanted 3%. However, the Teamsters achieved at least three enhancements Saturday with regard to meals, medical tests and drivers licenses, and staffing of out-of-Los Angeles productions.
Those enhancements fall short of the union's 1% concession, as union officials acknowledged during the meeting, which lasted a little more than an hour. Nonetheless, union leaders claimed those enhancements were, in essence, the tipping point. Reed acknowledged to members that the union had rejected the Friday night proposal, which did not include the three enhancements the studios offered the next day.
10,600 entertainment jobs leave Calif.
Report says permanent tax credits will entice industry
By Paul Bond
July 22, 2010
There are 36,100 fewer jobs in California because the state hasn't sufficiently wooed the entertainment industry, according to a report issued Thursday.
The Milken Institute report says 10,600 entertainment jobs have fled the state since 1997 along with 25,500 jobs indirectly related to the industry.
The entertainment industry jobs that have been lost paid an average salary of $92,000 per year, according to the report, titled "Film Flight: Lost Production and Its Economic Impact on California."
It lists a sample of movies that chose to film outside of California to take advantage of more lucrative tax credits and other business incentives. The most ironic title? "Captain America: The First Avenger," which is filming in England.
The 40-page report says 42 states, including California, and the District of Columbia offer incentives for film and television production, but it also notes that California's are less ambitious than many others.
New York recently won "Salt," for example, and Georgia got "The Blind Side" and "Zombieland." New Mexico has "Cowboys & Aliens" and "Thor," and Clint Eastwood took "Gran Torino" to Michigan.
Joining "Captain America" in the ironic category is "Battle: Los Angeles," which Columbia Pictures is filming in Louisiana.
The report says the film production industry is worth $57 billion annually and that California has given up $2.4 billion in wages and $4.2 billion in economic output since 1997, the peak year in entertainment employment in the state, when its share of North American employment in the industry was 40%. By 2008, it had dropped to 37%.
A year ago, California implemented a tax credit for projects budgeted below $75 million, and 75 TV and movie productions have been approved to receive those credits. But the report says California should do much more, including:
-- Make the tax credits, scheduled to end in 2014, permanent.
-- Provide the California Film Commission with enhanced staffing and marketing resources.
-- Expand tax credits for TV production to include network and premium cable shows.
-- Consider digital-media tax credits to retain developers of digital animation, visual effects and video games.
-- Encourage investments in infrastructure by implementing tax credits for building and upgrading studio and post-production space.
"The motion picture and television industry may trade in fantasy and escapism," the report says, "but as a business, it is hardly immune to economic pressures and the imperatives of technological change."
5 Reasons Comic-Con Is Hollywood's Cannes for Blockbusters
By Dominic Patten
Published: July 21, 2010
There’s Scotch, Hillary Clinton and, 40 years after it first modestly opened its doors in San Diego, Comic-Con.
Comic-Con has become the Cannes of blockbusters.
(See: Scenes From "Preview Night" -- a Slideshow)
To many, it’s the only film festival that matters. Sure, more snippets than full films are screened, a few purists declare it actually has gotten too Hollywood -- and the populists wish the geek stain would finally wash off.
(Also read: "Top 10 Things You Must See at Comic-Con.")
But it undeniably has become one of the most important stops on the Tinseltown circuit.
Why?
Unlike what fills the schedule at most film festivals, Comic-Con is where the movies that most of the world will actually see make their debut. And it’s no longer just comics and movies. Comic-Con also features TV – hello, Seth McFarlane! -- collectables and merchandise, anime, and videogames -- all things that thrive in American youth culture.
This year, from Thursday through Sunday, over 100,000 fans and exhibitors in a variety of mediums will be packing the halls and corridors of the San Diego Convention Center.
Here’s why you should be one of them.
1. THE STAKES
Do the math -- the studios do. Comic-Con is where the movies that keep the lights on and the flames burning for Hollywood see their first light of day. Mainlining the tip of their target market iceberg, the studios and stars have learned that good buzz from the fanboys at Comic-Con can translate into stellar box office down the line.
Last year, James Cameron talked up “Avatar,” Robert Downey Jr. and director Jon Faverau previewed “Iron Man 2,” “Twilight Saga: New Moon” revealed its fangs and Tim Burton and Johnny Depp hyped “Alice in Wonderland.”
Those four movies have made over $1,690,737,928 domestically and $5,079,845,630 worldwide. Was it all thanks to Comic-Con? Of course not, but Comic-Con certainly fueled the fire -- and that flame, to put it mildly, burned very bright.
2. THE SPECTACLE
Getting a glimpse of Ryan Reynolds’ “Green Lantern” suit in Hall H on Saturday is something. But just wandering around the cavernous San Diego Convention center and seeing dozens of Darth Vaders, Vikings, Wonder Women, Steampunks, leather bound forces of Cobra, Ninjas, Cookie Monsters -- and my all-time favorite from 2009, the Boba Fett bikini -- is something pretty special.
3. JON FAVREAU
Cameron might be King of the World -- and All-time King of the Box Office,” thanks to “Avatar’s” $2,730,924,867worldwide haul -- but there’s no doubt that Jon Faverau is the King of Comic-Con.
The director won over a skeptical crowd with “Iron Man” previews in 2007.
Transportation strike could paralyze Hollywood
Teamsters dispute with studios may lead to Aug. shutdown
July 18, 2010, 11:00 PM ET
In two weeks, Hollywood might be stranded by the side of the road.
A labor drama playing out behind closed doors could lead to an Aug. 1 strike by thousands of transportation workers, which could shut down most television and film productions in Los Angeles and possibly elsewhere.
If it seems unlikely, think again: The Teamsters' contract with the studios expires at the end of July, and negotiations appear to be at an impasse. Sources close to both the union and the producers say neither side will budge.
"If they're counting on the producers caving, that's the wrong strategy," a studio-side source said. "A strike is entirely possible."
The low-profile Teamsters Local 399 represents several thousand drivers who move everything from production equipment to star trailers and electrical generators. No drivers means no equipment, and no equipment means no film or TV production.
The Teamsters also represent casting directors and others, and the negotiations also include craft workers such as electricians. A walkout would idle these key workers as well as drivers.
A strike would be the third Hollywood work stoppage in less than three years, following a WGA strike in 2007-08 and a SAG stalemate in 2008-09 that led to a suspension of most movie production. It would be the first Teamsters action since a series of strikes during the 1980s. Unless the producers hire replacement workers -- a contingency they already are preparing for -- production would grind to a halt.
The hang-up is a single issue: Will the Teamsters' annual raise be 2% or 3%? That 1% difference amounts to tens of millions of dollars per year, according to a management-side source -- not insignificant to an industry reeling from the recession, collapsing DVD revenue and uncertain new-media business models.
Management has offered the union a two-year agreement, as requested (the studios usually prefer three years), increased contributions to the union health plan, increased pension payments and no rollbacks.
A studio-side source called the proposal "a solid, very respectable" deal. But the union wants the same 3% annual raise that IATSE members got in their most recent deal. IATSE represents below-the-line workers such as cinematographers and editors. There is no love lost between the two unions, though a recent meeting between 399 leader Leo Reed and IATSE head Matthew Loeb might have mended some fences.
In any case, that disunity is one reason for percentage envy.
The studios argue that the IATSE deal was negotiated in April 2008, before the economic meltdown. More recent agreements, such as AFTRA's one-year extension of its daytime deal, have featured annual raises of 2% or less. Offering the Teamsters a better deal "could make AFTRA look foolish," said a source.
Another concern for management is the upcoming SAG and AFTRA primetime negotiations, which begin in two months. A 3% raise for the Teamsters could embolden SAG and AFTRA to insist on the same. The DGA, negotiating in mid-November, likely would accept no less, and the WGA next year would want 3% as well. That ripple effect -- so-called "pattern bargaining" -- could multiply the cost of a Teamsters raise dramatically. Even a compromise at 2.5% would be costly.
Senate Puts Final Nail in Coffin of Movie-Futures Trading
By Ira Teinowitz
Published: July 15, 2010
<http://www.thewrap.com/print/19265>
Update, noon Thursday:
The Senate on Thursday overwhelmingly passed far-reaching financial reform legislation that included a ban on movie futures trading.
Passing with a 60-39 vote, the bill now goes to President Obama for signing.
The president, who has viewed the reform legislation one of the signature accomplishments of his administatration, is expected to sign the bill next week, if not sooner.
In a statement following the vote, Bob Pisano, interim CEO and president of the Motion Picture Association of America, which had led the fight against futures trading, said: “Speaking on behalf of a coalition that includes the Directors Guild of America (DGA), the Independent Film and Television Alliance (IFTA), the International Alliance of Theatrical Stage Employees (IATSE), the Motion Picture Association of America (MPAA) and its member companies, and the National Association of Theatre Owners (NATO), I want to thank the Congress for approving this measure ...
"Congress has acted decisively to ban proposed trading in box office futures and to make important reforms in the country’s financial regulatory system. We applaud the work the bill’s authors have done, and of course, the many Senators and Members who supported the provisions to prevent movie futures trading.”
Previously:
Congress is set to formally deliver what appears to be the final blow to plans to movie futures trading, giving the Motion Picture Association of America and Hollywood unions a big Washington win. <http://www.thewrap.com/sites/default/files/resize/harry_reid_0-250x273.gif>
* Movie Futures Trading Ban Inches Closer in Senate <http://www.thewrap.com/movies/column-post/movie-futures-trading-ban-inches-closer-senate-16686>
* Cantor Fitzgerald's HSX Lays Off Its Staff (Updated) <http://www.thewrap.com/movies/article/hsx-tk-18948>
* Cantor Exchange Backs Away From Hollywood <http://www.thewrap.com/movies/column-post/cantors-movie-futures-trading-gets-ok-18803>
<http://c3metrics.medifast1.com/vt/v.php?id=burst2> <http://www.burstbeacon.com/view/99359/49219/148154/281202/2752/2AF43B9B/160g1ss1vh92em/>
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The U.S. Senate in a key 60-38 procedural vote Thursday morning agreed to close off debate on financial reform legislation that includes a ban on the trading.
A final vote on the financial reform legislation is expected later in the day, according to an aide to Senate Majority Leader Harry Reid, D-Nev.
Democrats have more than enough votes to pass the legislation and send it to President Obama for his signature.
Cantor Fitzgerald, one of two companies that had wanted to pursue trading in the futures, had already abandoned its plans <http://www.thewrap.com/movies/column-post/cantors-movie-futures-trading-gets-ok-18803> in the wake of pending congressional action, despite r <http://www.thewrap.com/deal-central/article/cantor-fitzgerald-gets-us-approval-movies-future-trading-16492> eceiving approval <http://www.thewrap.com/deal-central/article/cantor-fitzgerald-gets-us-approval-movies-future-trading-16492> from the Commodity Futures Trading Commission to trade.
Media Derivatives, which also has been approved for trading by the CFTC, to date has taken the stance that it is “grandfathered” in and can move forward -- but even it is re-examining its legal position. A company spokesman declined to comment.
The financial reform legislation adds trading in box office futures to onions as the only items that can’t be traded as commodities in the U.S. The ban is retroactive to June 1, which would appear to bar trading by either Cantor or Media Derivatives.
The House passed the financial reform bill in December and the House Senate conference report on June 30.
Thursday’s vote caps a vigorous fight by the MPAA and Hollywood unions, <http://www.thewrap.com/movies/column-post/movie-futures-trading-go-media-derivatives-mpaa-squawks-18029> who were afraid that the box office trading could quickly lead to more negative talk about movies in an attempt to influence the trading.
Bob Kerrey in final talks to head MPAA
Former senator says position 'relatively certain'
July 13, 2010, 03:46 PM ET
Bob Kerrey (Getty) |
Robert "Bob" Kerrey acknowledged Tuesday in a radio interview that he is in final negotiations to head the Motion Picture Association of America.
Kerrey told Don Imus on his syndicated show that he is "talking very seriously" with the MPAA , adding: "We're in the final stages of negotiations."
Later in the show Kerrey praised the late Jack Valenti, who headed the MPAA from 1966 until his retirement in 2004. Kerrey praised him for his use of language and as "a wonderful man."
When pressed about the job, Kerrey said he was "relatively certain" he was going to do it, adding that he is "now talking contract" and "if nothing breaks down in that conversation, I'm taking the job."
Kerrey represented Nebraska as a senator after serving as governor of that state. He is a decorated war hero who most recently has had a controversial tenure as President of The New School in New York City. Kerrey told Imus his term at The New School will end sometime this fall.
'Nash Bridges' verdict! Now Don Johnson wins big!
Wed Jul 07, 2010 @ 01:51PM PST
By Paul Bond and Matthew Belloni
First Disney loses $270 million to Celador over profits from "Who Wants to Be a Millioniare." Now a jury has sided with Don Johnson in his battle with "Nash Bridges" producer Rysher Entertainment, awarding the actor-producer $23.2 million in damages from his 50% interest in the hit CBS cop show.
Johnson and his attorney, Mark Holscher of Kirkland & Ellis, convinced a jury that the 1996-2001 drama did indeed turn a healthy profit, in no small part because of worldwide reruns, and that Johnson was entitled to half.
The jury verdict requires Rysher to pay Johnson $23.2 million in damages and half of the future profits generated by the show. If the series remains popular in syndication — it’s in 45 countries now — it could mean as much as $50 million to Johnson during the next 15 years or so.
Rysher allegedly was owned from 2001-06 by Mark Cuban and Todd Wagner’s 2929 Entertainment and now is owned by Qualia Capital. The court is hearing testimony as to whether Qualia or 2929 is on the hook for all, part or none of the money owed to Johnson.
Rysher’s attorney, Bart Williams of Munger Tolles & Olson, promised to appeal and expressed confidence that, “in the end, today’s outcome will be reversed.”
Johnson, who attended the two-week trial in Los Angeles County Superior Court, thanked jurors, then told The Hollywood Reporter that he has a new respect for the U.S. justice system.
“It makes you want to stand up and sing ‘The Star-Spangled Banner,’ ” he said.
Johnson’s deal with Rysher, struck in 1995, dictated that he would acquire half-ownership of “Nash Bridges” if it lasted 66 episodes. The show was canceled after the 122nd episode was produced.
“The jury read the contract the way I understood it, and the way I meant it in 1995,” Johnson said.
Rysher had argued, in part, that Johnson’s salary was so large and that the cost of shooting “Bridges” in San Francisco so extravagant that it resulted in a $160 million loss for the show.
Johnson argued that adjusted gross receipts and backend participation accounting were unfair metrics that, if allowed to stand, would result in Rysher keeping money that rightfully belonged to the actor.
The lucrative arrangement Johnson struck with Rysher was a testament to the star’s popularity at the time, owed to his turn as Detective Sonny Crockett in “Miami Vice,” which became a pop-culture phenomenon during the 1980s. Johnson's deal lawyer Skip Brittenham testified in court that the "Nash Bridges" pact was particularly unusual, even among top TV stars.
Johnson said assertions that frustration with his salary on “Vice” led him to play hardball in his “Bridges” negotiations are overblown.
“One has nothing to do with the other,” he said. “This has to do with ownership and justice.”
Even six years after “Miami Vice” was off the air, Johnson was perceived as one of TV’s hottest commodities, and CBS promised to put any show he starred in on the air for at least a season. That’s when he conceived the concept of “Bridges,” a show ultimately created by “Lost” executive producer Carlton Cuse. The first script was written by Johnson and his neighbor, author-journalist Hunter S. Thompson.
Johnson played the title character, a fortysomething, twice-divorced police inspector with a penchant for magic tricks. Cheech Marin played his partner.
“We’re grateful that the jury recognized that Don Johnson co-owns ‘Nash Bridges,’ ” Holscher said. “Rysher will have to now, as they always should have, treat him as a partner.”
Media moguls descend upon Sun Valley
Iger, Ovitz, others stay mostly mum while arriving at lodge
July 6, 2010, 09:15 PM ET
SUN VALLEY, Idaho -- Media and tech execs slowly trickled in throughout the day Tuesday as the town got ready for the 28th annual Allen & Co. gathering.
After a top-secret but low-key welcoming event Tuesday evening, the retreat's formal program will start early Wednesday with a panel on the future of entertainment in the digital age moderated by the New Yorker's media writer Ken Auletta. His panelists: IAC CEO Barry Diller, DreamWorks Animation CEO Jeffrey Katzenberg, former News Corp. No. 2 Peter Chernin and Activision Blizzard boss Bobby Kotick.
Auletta told The Hollywood Reporter that he expects most content giants to look more aggressively at ways to make money from paid content in the digital world, even though News Corp. chairman and CEO Rupert Murdoch has been the most vocal about paywalls online.
Among other planned panels are a discussion on the fast-evolving science of the brain and a session on the world economy and overseas business opportunities. There's also a panel on cities and the issues facing them that is likely to feature New York Mayor Michael Bloomberg, Newark, N.J., Mayor Cory Booker, Chicago Mayor Richard Daley and former Los Angeles Mayor Richard Riordan.
Disney CEO Robert Iger caused a stir among reporters when he arrived at the Sun Valley Lodge, where many attendees are staying, with wife Willow Bay.
But asked the question on everybody's mind -- namely, whether the Mouse House will sell ABC -- Iger smiled and said, "I'm not going to answer the question on everybody's mind."
Michael Ovitz's arrival a couple of hours later also attracted attention, but the former CAA boss had little insight to share about likely topics of debate.
Discovery Communications CEO David Zaslav told the press that the economy and advertising market still are looking healthy, but because that can change quickly in a slow recovery, he expects some talk about the outlook here this week.
"Advertising remains pretty strong," Zaslav said.
He predicted a lot more 3D content, including possibly on the planned OWN network, a joint venture of Oprah Winfrey and Discovery. Zaslav said Winfrey is in Hawaii and won't be coming to Sun Valley.
Asked about Murdoch's push into paid content online, he said, "I think that's a good step forward."
Robin Li, CEO of Chinese Internet giant Baidu, also caused a ruckus upon arrival as CNBC's Julia Boorstin wanted to know if he is looking to partner with U.S. content companies.
"We'll see. I don't know," he replied as he got out of his car.
As industry players have continued to look for ways to expand overseas, cross-border partnerships are expected to be a topic at this week's mogul retreat.
Among the other big-name arrivals Tuesday were Chernin, CBS Corp. CEO Leslie Moonves and family, Haim Saban and Michael Ovitz.
As far as the annual surprise guest at the Allen & Co. retreat goes, it was unclear Tuesday.
Last year's special speaker, LeBron James, is on the original guest list again, but the NBA's most-wanted free agent won't come here as he is expected to make a decision on his future club this week.
Tonight, fashion maven Diane Von Furstenberg will host a soiree for the Dream Foundation, a Santa Barbara, Calif.-based organization that emulates the Make-A-Wish Foundation specifically for adults rather than children.
Von Furstenberg will host the event at a local Sun Valley boutique; her husband Barry Diller is expected, too.
Dan Cox contributed to this report.
Cantor Exchange Backs Away From Hollywood
By Ira Teinowitz
Update, Monday 3:25 p.m.:
Shortly after getting federal approval for his movie-futures trading plan, Richard Jaycobs, president of Cantor Fitzgerald’s exchange, said Monday that congressional action will prevent the company from moving forward.
He cited the financial reform legislation expected to be approved this week by Congress, which includes a ban on box-office trading.
"Cantor Exchange wishes to express its appreciation to the hundreds of motion picture professionals who advocated for box office futures contracts, including all those who publicly Jaycobs their support and those who wrote letters of support to the CFTC and members of Congress," he said in a statement.
"We are, however, aware that a bill reported out of the House-Senate conference last Friday continues to include a provision banning box-office receipts as the basis of any futures contract. In light of this pending legislation, Cantor is continuing to assess its options for providing risk management and financing tools to the motion-picture industry."
A company spokesperson said the company is assessing trading other products on the exchange that have nothing to do with the movie industry.
The Commodity Futures Trading Commission Monday gave a second OK for a firm to trade film box office futures, even as Congress readies to enact legislation that could ban the trading.
The commission, in a 3-2 vote, approved Cantor Fitzgerald’s request to begin trading. A week ago, the commission by an identical vote approved Media Derivatives' request. Media Derivatives uses Trend Exchange as its brand name for its market.
Congress, however, is expected to pass financial reform legislation this week that includes a ban on the commission approving trading in movie box office futures -- though the success of the bill could be affected by the death Monday of Sen. Robert Byrd.
How passage of the legislation would affect Cantor and Media Derivatives has been up for question.
The Motion Picture Association of America and some Capitol Hill aides say the legislation would ban any trading -- even that already approved by the commission after June 1. Media Derivatives, on the other hand, insists the ban only affects additional applications for trading, and that trading already approved by the CFTC are “grandfathered” and can go forward.
Courts may eventually be called on to decide who is right.
If Media Derivatives presses forward, the most likely scenario is that the CFTC would make a determination on how to proceed, and any resulting decision would face a court challenge.
In approving the request, the commission majority said that federal law requires commission to approve trading unless it can reach a finding that a trading instrument violates the act.
“Based on our review, the commission does not believe that the terms and conditions violates the act or the commission’s regulations.”
Commissioner Jill E. Sommers reiterated her dissent of two weeks ago. Commissioner Bart Chilton reiterated his dissent, too, but he added some comment.
“The contracts are not, in my view, ‘commodities’ under the definition contained in the Commodity Exchange Act. If movie futures can be traded, we could also have terrorism contracts or death pool contracts. None are good ideas,” he said in dissent.
“Second, the contracts are subject to disruptive trading and manipulation because movie studios have a tremendous influence on box office returns. In no other commodity does one entity have the ability to control the settlement price. If you are a movie studio and you alter your marketing budget for a film, that could impact (and no question does) box office returns.
“Finally, I am not convinced that these contracts are needed as a hedging tool or that they would receive more than occasional use. The agency has received a few letters that would suggest a real need for these contracts. Certainly there has been no outcry to use these markets as a hedging tool.”
Although both Cantor and Media Derivatives want to trade movie box office futures, their proposals for trading are very different.
Cantor’s proposal is aimed more towards the general public.
The company proposed offering futures contracts costing as little as $50 that are based on one millionth share of box office revenue of box office grosses for the first four weeks of a picture in wide release. Trading would begin six months before a movie’s release.
Media Derivatives is aimed more at professional traders. It would offer both futures and options based on box office revenues the first weekend of a movie’s release with each of the futures contracts initially costing at least $5,000. Trading would launch a month before a movie’s release date.
Cantor initially proposed trading Lionsgate’s “The Expendibles,” while Media Derivatives proposed trading Sony Pictures’ “Takers.” Both futures companies made clear the films were examples with the exact film replaceable depending on when approval came.
Big movie studios have joined with Hollywood unions to intensely fight the trading, warning it could “harm the motion picture industry.”
In appearances in Congress, at the commission and in legal filings, they’ve argued that the proposed trading “could harm a motion picture’s prospects by negatively affecting financiers and audiences perceptions of it.”
“Motion pictures slated to open in limited theaters and then broaden based on word of mouth could be ruined by futures pricing that casts them in a false light of a failed opening,” MPAA interim CEO Robert Pisano said in testimony at the commission.
They’ve also argued that the futures couldn’t really be used to hedge investments, that box office numbers could be manipulated, that trading would create new burdens on studios and conflicts of interests for studio employees. Finally they’ve argued that the trading is more gambling
Blow-Up at Overture Leads to McGurk and Rosett Resignations
By Sharon Waxman
Published: July 1, 2010
Rising tension over the lack of funding to release Overture movies led to a dramatic head-to-head between the chief executives of Overture Chris McGurk and Danny Rosett and Chris Albrecht from their parent company, Starz, ending in the Overture executives' resignations Thursday, WaxWord has learned.
With Overture for sale since February and its ability to produce or acquire movies frozen since then, McGurk and Rosett had been in limbo for months, waiting for a buyer or to be shut down.
Instead, nothing clear has happened in that time.
The two executives had been trying to find financial backers to buy the company with them. There have been numerous bids since April, but John Malone – who owns Liberty, the parent company – has not responded. (Malone pictured below right.)
So the two frustrated indie heads brought matters to a head.
According to two knowledgeable individuals, McGurk and Rosett had two tension-filled meetings with Albrecht this week, all around the question of whether Starz would provide enough money to release the three remaining films on Overture's schedule this fall.
The movies are "Jack Goes Boating," starring Philip Seymour Hoffman; “Stone,” starring Robert De Niro; and “Let Me In,” a remake of a Swedish horror film starring Richard Jenkins.
In frustration, McGurk and Rosett sent a memo to Albrecht (below left) on Thursday demanding that the studio commit to a wide release of at least two of the movies, requiring a capital commitment of about $50 million.
They told Starz that they needed a clear response as to whether the parent company would provide the funding, since the movies were scheduled for release this fall.
An acrimonious phone call ensued between Albrecht and the two executives – presumably with Albrecht declining to commit -- leading to an emailed resignation.
That leaves marketing chief Peter Adee as more or less the only senior executive left in the movie company.
While the drama played out between McGurk, Rosett and Albrecht, the true power behind the scenes is Liberty Media owner John Malone. Malone, a notoriously hard-to-read mogul, by all accounts grew disillusioned with the subsidiary Starz Media, which includes Overture, the Anchor Bay Entertainment video company and two animation companies after three years of unprofitable movies.
The studio has had a few profitable films – “Law Abiding Citizen” with Jamie Foxx, and a second-rate Robert DeNiro thriller, “Righteous Kill” ($77 million worldwide) -- but most of its 15 releases have had disappointing box office results, like “Last Chance Harvey” ($14 million domestically) with Dustin Hoffman.
Most disappointing perhaps was the Michael Moore documentary, “Capitalism: A Love Story,” which won some critical support but failed to to find a wide audience or get traction for the Oscars. (Though “The Men Who Stare at Goats” has had some success, taking in $32 millon domestically.)
In a change of direction, Malone hired Albrecht, the HBO veteran executive, to take the helm.
Even before Albrecht’s arrival in January, however, the cable channel had taken a strategic move away from being a premium movie outlet to launching original programming, including “Crash” and “Spartacus.”
The idea behind Overture seemed to make more sense when the company launched in 2006. Starz provided the critical distribution outlets of cable and pay per view to support the more risky business of distributing independent film.
The company was capitalized at $300 million, with a mandate to make or acquire 8 to 12 movies a year, with budgets under $25 million.
Overture movies took in $105 million in 2008, and $160 million in 2009.
Buyers have circled the studio, which would need about $250 million to operate for the next 18 months.
But in that time, the independent movie business has taken a nosedive. And one independent company after another has bitten the dust. Just Wednesday, Bill Pohlad's Apparition laid off most of its employees, and announced its attempt to "restructure." The Weinstein Company appears to have won a new lease on life with the elimination of $450 million in debt last week, even as Disney continues to try and sell Miramax, reduced to a library.
It is not clear whether Malone is even prepared to sell Overture. "There is a high probability that he won't sell," said one executive close to the company.
Previously:
Chris Albrecht, president and chief executive officer of Starz, LLC, announced that Overture Films executives, Chris McGurk and Danny Rosett, tendered their resignations today due to differences over the strategic direction of the company.
“I want to thank Chris and Danny for their dedication and hard work in building the studio from the ground up, and wish them well in their future business endeavors,” said Albrecht.
Founded in November 2006, Overture Films is a wholly owned subsidiary of Starz, LLC, which is a unit of Liberty Media Corp. and which also operates the Starz Entertainment premium television business and the Starz Media production and distribution company.
MGM to request sixth debt extension
Lenders holding nearly $4 bil in Lion debt expected to give OK
July 1, 2010, 10:00 PM ET
MGM soon will request a sixth postponement of its big debt and interest payments as the Century City studio seeks to restructure its finances and possibly tap a new CEO.
Lenders holding nearly $4 billion in Lion debt are expected to agree to the extension, though nothing is guaranteed and a full-press effort continues to finalize a restructuring proposal sought by the lenders. The studio formally will request the latest extension about a week before the July 15 deadline on a $250 million principal payment and $200 million-plus in owed interest.
That could buy MGM at least several additional weeks to flesh out financial details of its corporate restructuring. But a proposed business plan, likely involving a corporate partnership with another film company, would help sell yet another extension of the debt forbearance to a frustrated group of more than 100 lenders.
Meanwhile, speculation continues about whether the studio will sell off its share of rights to "The Hobbit" to co-production partner Warner Bros., whose New Line is overseeing project development with director Peter Jackson; shooting is set to begin in January. MGM executives would like to hold onto its share of the "Hobbit" rights as long as possible, but some lenders are lobbying for a sell-off to raise funds.
MGM is being run by an office of the CEO, with restructuring specialist Stephen Cooper, film chief Mary Parent and CFO Bedi Singh collaborating as co-CEOs. The studio's management and debtholders have been consulting with possible restructuring partners including Spyglass, Lionsgate and Summit, whose execs ultimately could be tapped to run the Lion.
Key to any restructuring will be an infusion of new capital, and the search for that by the studio and its prospective restructuring partners continues. But it's possible that MGM will crown a restructuring partner and simply hope that and a new business plan for MGM will prompt bankers to fork over enough capital to run the studio for the next few years.
MGM owners Providence Equity, TPG Capital, Sony, Comcast, DLJ Merchant and Quadrangle could lose their equity positions in any restructuring, which likely would involve a prepackaged bankruptcy filing.
Before its restructuring talks, MGM held an auction that drew a handful of underwhelming offers to buy the studio outright. Warners placed a top bid of $1.5 billion that was deemed too low by lenders but remains on offer.
Feds, studios join forces against piracy
Officials seize domain names of sites offering movies
By Alex Ben Block
June 30, 2010, 02:11 PM ET
Updated: June 30, 2010, 05:21 PM ET
Hollywood studio and industry executives have joined with the U.S. Immigration and Customs Enforcement and the U.S, Attorney for the Southern District of New York to launch Operation in our Sites, an initiative aimed at stopping Internet counterfeiting and piracy.
During a news conference Wednesday on a soundstage at Disney Studios, the feds announced that they have kicked off the effort by seizing nine Internet domain names of websites offering first-run movies, often within hours of their release.
ICE investigators and the Department of Homeland Security also have seized assets from 15 banks, PayPal and advertising accounts and moved on four residential search warrants in four states.
The seized domain names are tvshack.net, movies-links.tv, filespump.com, now-movies.com, planetmoviez.com, thepiratecity.org and zml.com.
Undercover agents downloaded newly released movies from the sites to determine they were offering stolen content.
Also seized were the domain names and website content of ninjavideo.net and ninjathis.net, which generated revenue from ads and donations.
Alan Bergman, president of the Walt Disney Studios, told attendees that this is no small matter to Hollywood.
"Enforcing these laws is critical and allows these companies to continue their investment" in the production of movies and television shows," he said.
Even Tom Cruise Couldn't Beat This Summer's Hollywood Memes
With Some Creative Word-of-Mouth Ideas, 'Knight and Day' Could Have Disproven Cynical Narratives
by Chris Thilk
Published: June 30th 2010
In case you didn't notice, "Knight and Day," the new romantic action comedy starring Tom Cruise and Cameron Diaz, did not have a great opening weekend. It grossed just over $20 million and came in third place behind "Toy Story 3" (which, along with many others this year, reappeared in the top slot) and "Grown Ups," the Adam Sandler and gang comedy.
It's not as if this was surprising, though. Tracking had been weak prior to release, signaling that there was little interest in seeing Mr. Cruise and Ms. Diaz engage in wacky capers around the globe, with Mr. Cruise acting unhinged and more than a little insane while Diaz reacted hysterically to the events around her.
So what happened? Let's examine some theories:
'Knight and Day' only grossed just over $20 million opening weekend.<http://adage.com/images/bin/image/rightrail/knightandday-062910.jpg?1277835003>
'Knight and Day' only grossed just over $20 million opening weekend.
I'd be surprised if there weren't at least some portion of pontificating pundits who chalk this up as another example of one of 2010's emerging Hollywood memes, namely the "movie stars don't work" idea. These are two of Hollywood's biggest stars we're talking about here, after all, and so success with both of them should have been as automatic as Steve Kerr at the three-point line.
The failure of "Knight and Day" might also be pegged to another contender for this year's story hook, "The audience only wants sequels/franchises/reboots." This is one of this summer's only original properties, even if you can see aspects of a half dozen other movies in the plot outline. So this idea might have some validity, especially since, sans everything else, star power itself should have acted as the brand the audience latched onto for familiarity.
There's also the much simpler explanation that the campaign was a bit disjointed, without a poster or outdoor ads that featured the movie's two big stars -- something Fox's co-president of marketing Tony Sella said was an intentional tactic <http://latimesblogs.latimes.com/the_big_picture/2010/06/foxs-tony-sella-on-knight-and-day-blame-game-blame-me-not-tom-cruise.html> to set this film apart from the pack -- and a series of trailers that didn't quite know whether to sell it as a romantic adventure or an adventurous romance.
Whatever the larger reason, there were things that the campaign did well (saturating TV with ads) and things that it didn't (the aforementioned lack of movie-star faces on posters), as is the case with most movies. But with as much warning that vast swaths of the moviegoers simply weren't aware or interested in the movie, it seems that there would have been plenty of time to engage in an inspired word-of-mouth marketing campaign that could have turned the ship around.
Now Fox did indeed try to get word-of-mouth going for the movie, mostly in the form of advance screenings about a week before release. That's a tactic that's been used over and over again to try and get audiences excited. It didn't work in this case, though, so maybe it's time for the industry to start trying new things.
Why not try something unexpected: Let some people watch the movie -- or at least a significant chunk of it -- at home. Work with a VOD provider so that random customers can watch a severely extended preview. Or set up in-home viewing parties that are movie-themed for those previews. Cater the party and give everyone a 2-for-1 coupon to see the movie at theaters.
Provide incentives: If people came out of those advance screenings having enjoyed
Fight over boxoffice trading wages on
Cantor likely to win CFTC approval Monday for first contracts
June 29, 2010, 11:00 PM ET
Although Congress has agreed to a ban on trading derivatives based on movie boxoffice, Cantor Exchange likely will win approval for its first contracts Monday from the Commodity Futures Trading Commission since the Wall Street reform bill won't be signed into law before July.
Ultimately, however, the final word on movie futures trading by the public likely is to be decided in a court of law. Even if this ban takes effect, it might inspire a private version of futures trading involving investors and the same big movie companies that have vehemently opposed the official exchange plans.
Bob Pisano, interim CEO of the MPAA who has led the fight against the trading on behalf of a coalition that includes the Hollywood guilds, theater owners and the IFTA, said Friday, "We are heartened by the conference committee's actions and look forward to the full House and Senate approving the legislation."
Both Cantor Fitzgerald's Cantor Exchange and Veriana Networks' Trend Exchange declined comment on the action by the House-Senate conference committee, which retained an amendment crafted by Sen. Blanche Lincoln, D-Ark., in the final bill that outlaws futures trading based on boxoffice.
Set in motion long before the legislative action, the legal deadline is Monday for the CFTC to act on the Cantor request for approval of its first products, including futures based on the performance of the movie "The Expendables," starring Sylvester Stallone. The CFTC could approve, deny or just not act, which would be the same as approving.
However, the CFTC never has denied a request in its history. It either works in advance to deal with objections or asks that the proposal be withdrawn before it is voted down. So after months of work on this, Cantor's approval remains likely.
Despite the looming legal ban, neither Veriana nor Cantor is expected to give up easily. Veriana CEO Robert Swagger had indicated they would mount a legal challenge, perhaps charging that the MPAA and its allies violated antitrust laws or claiming that because Veriana got approval for its first products June 15, it should be considered grandfathered into existence.
Cannes Grows Up as Clients, Creatives Collaborate
Must-Attend Event Draws Big Names, Packed Seminars, Consensus That Clever Marketing Can Also Achieve ROI
By Laurel Wentz
Published: June 28, 2010
CANNES, France (AdAge.com) -- The Cannes Lions International Advertising Festival is rebounding from the global recession and emerging as an even more client-centric gathering focused more broadly on creativity and return on investment and less on narrow ad categories. So much so, in fact, that the event's organizers plotted the introduction of Cannes Lions effectiveness awards next year and floated the idea of changing the festival's name, likely dropping the word "advertising" to reflect the transition the festival, its attendees and the industry are going through.
Clients made up almost 15% of a total of around 8,000 attendees, as the number of marketer companies -- about 400 this year -- and the size of their delegations mushroomed. Most clients send between one and five executives, but Kraft was up to 20 people from five just three years ago, and there were newbies ranging from MasterCard to Russia's biggest bank, Sper Bank.
Francois Durand
Unilever's Keith Weed (l.) and WPP's Martin Sorrell
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Several cited Procter & Gamble's decision to send "hundreds" of people to Cannes a few years ago as a real wake-up call that inspired them to make the trek. In fact, P&G hasn't sent more than about 50 people (and about 20 this year) but that perception shows the impact of the first big, high-level client delegation to Cannes. Last year's economic disaster derailed or downsized those plans for some marketers and this is the first year they're putting them into practice.
Marketers even ask the festival for seminar spots, further justifying their trips to Cannes. This year's seminars -- pairing speakers such as Ben Stiller and Jeff Goodby, and director Spike Jonze with Kraft -- so packed the 1,100-seat Debussy auditorium that some were transmitted to an overflow auditorium.
Martin Riley, the chief marketing officer of Pernod Ricard, made the trip with two of his colleagues and plans to send a larger Pernod team next year, a signal to agencies that creativity is valued and expected. "If you're going to be a good partner to your agency, and push your agency, you have to have a sense of what's possible and happening creatively, not just in your own category," he said.
David Jones, global CEO of Havas Worldwide, who counts Mr. Riley as a client, said it's a reflection of the importance of creativity in advertising. As marketers have moved from a world where messages were pushed through mass channels such as TV to one in which consumers pull in the messages that interest them, the bar for content is higher. "Being creative has become critical and essential to getting your message heard," he said.
Throughout the week Cannes-goers scouted for talent to hire and big-screen TVs to watch World Cup matches, and proved that clients and creatives can coexist, whether at a 9 a.m. seminar at the Palais des Festivals or at the late-night Gutter Bar, where everyone from senior marketers to the founder of cause-driven retailer Toms Shoes, Blake Mycoskie, to Facebook's Mark Zuckerberg were seen.
"It's good to embrace the client culture," said David Lubars, chairman-chief creative officer of BBDO North America, who was at Cannes with a whole alphabet of clients including AT&T, HP and J&J. Even Mars came. "Lots of old-guard creatives said, 'Oh, the clients took the show away from us,' but I like that clients come here and get the bug, and want to win."
The U.S. ended the week on a high note by winning three of Saturday's four Grand Prix awards, in the Film, Integrated, and Titanium categories, all for campaigns that have been big favorites. Wieden & Kennedy, Portland won both the Film and Integrated Grand Prix, for Nike's "Livestrong" and Old Spice's "The Man Your Man Could Smell Like" (Film). And Crispin Porter & Bogusky, Boulder, took the Titanium Grand Prix for Best Buy's "Twelpforce."
The jury awarded only one other Titanium Lion, for Ikea's Facebook showroom, by Forsman & Bodenfors, Gothenburg, Sweden. Gatorade's "Replay" by TBWA Chiat Day, already a big winner throughout the week, picked up an Integrated Gold.
In this year's new category, Film Craft, the Grand Prix went to DDB, London, for Philips' "The Gift," in which five directors shot short films from the same script.
Due to the blurring of lines, many entries won in multiple categories. JWT Italia's "Auditorium" effort for Heineken, in which soccer fans fear they'll have to sacrifice watching a big match to attend a classical music concert with their girlfriends, won prizes in five of the week's first six contests judged -- media, PR, promo, direct marketing and outdoor.
And at the Palais, a SapientNitro exec who was operating a vending machine with face-recognition software that offered free Unilever ice cream in return for a smile to be posted on Facebook, said proudly that his fancy machine scored a bronze Lion at the festival -- but couldn't remember in which category. They had entered it in five.
For next year, Festival Chairman Terry Savage said it's about "90% sure" that Cannes Lions for effectiveness will be introduced and that "clients will play some sort of role," possibly on the jury. To set the creative bar high, only work that was shortlisted or won at this year's festival will be eligible to compete for an effectiveness award in 2011. This year the festival shortlisted about 2,325 entries, or about 10% of total work entered.
~ ~ ~
Contributing: Abbey Klaassen and Jack Neff
Posted: Fri., Jun. 25, 2010, 4:00am PT
Print
New chief at Michigan Film Office
Carrie Jones to replace Janet Lockwood
There's a changing of the guard at the Michigan Film Office.
Longtime director Janet Lockwood is stepping down. On Thursday, she'll be replaced by Carrie Jones, who was appointed deputy director of the office earlier this year by Gov. Jennifer Granholm. Jones, a former Granholm fund-raiser, has no film or TV experience.
Lockwood has been the state's top film officer for 19 years. Under her leadership Michigan established the nation's most generous incentive program, offering film tax credits as high as 42% for qualified expenditures.
The incentives have helped attract several high-profile productions to the state, including "Gran Torino," "Up in the Air," "Hung" and "Real Steel."
At the heart of Michigan's incentives program is a 40% refundable and transferable tax credit on money spent on shoots in the state. Another 2% is available for productions situated in certain "core communities," including Detroit. The minimum budget to qualify starts at $50,000.
Wages paid to Michigan crew are among spends eligible for full credit of the incentives. A 30% incentive is available for wages paid to workers brought from out of state. Salaries for above-the-line participants also qualify, although capped at $2 million per individual.
But while the filming activity has brought considerable coin to an economically depressed region, it has not been without controversy. Some say the program is not bringing enough jobs to the region, while some in Hollywood have criticized the application process as too complex.
Lockwood said her departure is a retirement decision that she's been discussing publicly since January. "I've been in state government for 34 years," she told Daily Variety on Thursday just as she was about to leave for her retirement party. "I've had other offers but I haven't taken any of them yet."
Jones said she can't speak to the media until July 1.
Contact Peter Caranicas at peter.caranicas@variety.com.
Fair offers free admission to the unemployed
By Staff, SDNN
06/25/10
While the San Diego County Fair may not be able to ensure job security for its attendees, it has found a way to make unemployment a little easier for locals.
The Fair will welcome those who are unemployed for free on Tuesday and next Tuesday, June 29.
With proof of unemployment (an unemployment check or pay stub), laid-off workers can enjoy free admission to the San Diego Fair’s second annual “stimulus program.” Fair goers an also park at the Equestrian Parking Structure, which is free, and enjoy all grandstand music for no charge on Tuesdays. Every Tuesday children get into the fair free, so the whole family can enjoy for little or no money.
Read more:
http://www.sdnn.com/sandiego/2010-06-22/local-county-news/fair-offers-free-admisstion-to-the-unemployed#ixzz0qsQGpqAL
What Viacom's loss to YouTube means for Hollywood
Wed Jun 23, 2010 @ 07:20PM PST
By Matthew Belloni
The Google geeks have beaten Hollywood chic. But how much will today’s court ruling against Viacom in its $1 billion copyright battle over YouTube tip the balance of power from professional content creators to online distributors?
In ruling on summary judgment that the Google-owned video-sharing site is protected from liability by a safe-harbor provision in copyright law, U.S. District Court Judge Louis Stanton has sent a clear message:
When user-generated video sites implement reasonable takedown procedures, they are shielded from infringement lawsuits based on the copyrighted content that users upload.
“If a service provider knows of specific instances of infringement, the provider must promptly remove the infringing material,” Stanton wrote in the opinion. “If not, the burden is on the owner to identify the infringement.”
The digital community has heralded the decision as a win for consumers against over-reaching content conglomerates. Maybe, but the real victor here might be the culture of Silicon Valley and its hyper-innovative, fast-and-loose, build-an-audience-and-figure-out-the-details-later mentality. In the emerging legal framework of the Web, old-media traditions like strict copyright protection are being redefined for a more fluid, more casual, more mix-and-mash culture. Rights are still rights, of course, and Hollywood still gets to decide how the content it spends millions of dollars to produce is exploited. But with that great content increasingly comes a great responsibility (many would say a great burden) to work with the various blogs and aggregators and user-generated communities to police infringement, rather than stifling sites like YouTube that consumers clearly have embraced.
“Studios have a tremendous tool in the Digital Millennium Copyright Act that allows them to send a notice and get the relief they desire,” said Kurt Opsahl of the Electronic Frontier Foundation, a digital-rights advocacy group that backed Google in the case. “Whether you are Viacom or a small rights-holder, that tool remains available.”
Several Hollywood studios filed briefs in support of Viacom in the massive litigation, initially filed in New York in 2007. It's no surprise that Viacom general counsel Michael Fricklas (left) today called the decision a disappointment and vowed to appeal.
“YouTube and Google stole hundreds of thousands of video clips from artists and content creators, including Viacom, building a substantial business that was sold for billions of dollars,” Fricklas said in a statement. “We believe that should not be allowed by law or common sense.”
Google’s win probably won't change the way studios interact with YouTube, which has implemented effective takedown procedures and a content-filtering system since grabbing the zeitgeist in 2006 thanks in part to viral videos like “Lazy Sunday” from NBC’s “Saturday Night Live” and clips from Viacom’s “The Daily Show.”
Evidence submitted by Viacom in the litigation showed that early on, top YouTube executives knew that infringing content was available on the site and led to spikes in traffic (YouTube co-founder Steve Chen on copyrighted content: "Steal it!...[W]e need to attract traffic....[T]he only reason our traffic surged was due to a video of this type."). But YouTube now is among the more responsible players when it comes to online video, striking licensing deals with content owners and responding aggressively to notices of infringement.
Still, the court’s ruling could leave the impression that building a web video service in part on the back of copyrighted content is legal as long as you eventually clean up your act. That likely will be an issue addressed in Viacom’s appeal.
Eric Goldman, director of the High Tech Law Institute at Santa Clara University School of Law, said the impact of the case on Hollywood could be felt if user-generated websites refuse to deploy filtering technologies or otherwise go beyond what the DMCA mandates.
“A lot of content owners want service providers to do more than the law requires,” Goldman said. “This opinion rejects those requests.”
To that end, the ruling also could renew Hollywood calls to reform copyright law at its source.
“Congress might decide to get involved here,” Opsahl said. “And I would not be surprised if the new IP czar weighed in on the issue.”
Fricklas, who has spearheaded the costly YouTube litigation, sounded an upbeat note despite the defeat.
“We always knew that the critical underlying issue would need to be addressed by courts at the appellate levels,” he wrote. “Today’s decision accelerates our opportunity to do so.”
New Yorker Builds Homemade Nuclear Reactor
Mark Suppes, a Web developer for Gucci by day, is hoping to solve the world's energy crisis with his late-night tinkering: Suppes is attempting to construct a homemade nuclear fusion reactor in his Brooklyn lab that creates more energy than it consumes. "Suppes, 32, is part of a growing community of 'fusioneers'—amateur science junkies who are building homemade fusion reactors, for fun and with an eye to being part of the solution to that problem," the BBC reported. Scientists have called nuclear fusion, which forces atoms to join and release energy, the "holy grail" because it could produce an endless supply of cheap, clean energy. Suppes is the 38th independent amateur physicist to achieve nuclear fusion, but the problem is that nobody has yet figured out how to create a reactor that produces more energy than it consumes. "I was inspired because I believed I was looking at a technology that could actually work to solve our energy problems, and I believed it was something that I could at least begin to build," Suppes told the BBC. Suppes has spent nearly $40,000 of his own money on equipment for his reactor, but that's a rounding error for governments around the world that have spent billions in attempts to solve the problem for decades. "Real researchers that are working at Los Alamos [U.S. Department of Energy National Laboratory] and are working at Lawrence Livermore are following this and commenting on it, even though it's not an officially sanctioned project," said Richard Hull, founder of Fusor.net. Suppes hopes to secure funding and build one of the first break-even reactors in the coming years. Iter, a company that is working on a multibillion-dollar reactor project set to be completed in nearly a decade, "said it would be wrong to dismiss out of hand the notion that an amateur could make a difference," the BBC reported.
Increased Advertiser Interest Signals Resurgence of Big TV
Impressive Upfront Numbers Suggest Marketers Agree That -- for Now -- Medium Offers Most Bang for Buck
by Brian Steinberg
Published: June 21, 2010
 |
Source: PricewaterhouseCoopers LP |
NEW YORK (AdAge.com) -- After spending years complaining about TV, have advertisers embarked on a new love affair with the medium? Marketers have expressed frustration over pricing, effectiveness and nearly everything and anything else having to do with boob-tube advertising, but now they are running back into Big TV's arms. And they may not want to leave its embrace.
Marketers and media buyers swore just a few months ago they would never capitulate to the low double-digit-percentage price increases TV networks sought in this year's "upfront" market. But advertisers reversed course and paid what they said they wouldn't in select cases. Now the trend looks poised to intensify.
"I think there might be a re-examination of television," said Ed Atorino, a media analyst at Benchmark Co.
Indeed, as marketers examine all sorts of new-media options, they may be finding that TV is a better buy for the money. "In online video, if you try to reach the audience you get on national television, it will cost you more" on a per-customer basis, suggested Rino Scanzoni, chief investment officer at WPP's Group M. "You have to put together a lot of inventory to be able to reach that level" of unique viewers. TV looks dowdy compared to a lot of new technology, but "its underlying value has really sustained itself through a lot of transformation in the media landscape," he said.
Two new studies issued last week see TV growing anew after suffering a period of choppiness.
PricewaterhouseCoopers projects ad spending on total U.S. TV will grow to $80.3 billion in 2014 from $62.1 billion in 2009, surpassing its previous high in 2006 of nearly $70 billion. Meanwhile, Interpublic Group of Cos.' Magna Global media-research unit sees TV's share of total media dollars growing to 36.8% in 2015 from 35.5% in 2009.
Picture brightening
Last year, marketers pushed back against TV networks, demanding pricing rollbacks and cutting ad commitments. Spending on TV fell 9.5% in 2009, according to Kantar Media, and rose only 0.1% in 2008. In recent weeks, advertisers have been flocking to the medium with enthusiasm. Ad spending on overall TV increased 10.5% in the first quarter of this year, Kantar said.
Marketers have already snatched up the majority of Fox's inventory in next year's Super Bowl, well before the summer's half-way point, and have bought up a significant portion of NBC's "Sunday Night Football," according to people familiar with the situation. They've agreed to pay higher-than-normal prices to advertise in Conan O'Brien's new talk show on Time Warner's TBS. And they recently forked over shocking premiums for ad time in the series finales of Fox's "24" and ABC's "Lost" -- even though both shows have lost viewers over time.
Sure, the web, mobile devices and social networks are taking up more of consumers' time, but other types of media "don't negate the fundamental value of delivering a large-scale, cost-effective and cost-efficient audience," said Howard Bass, senior partner, advisory services, global media and entertainment center at Ernst & Young. "You can't get it elsewhere. That's the difference between television and various types of online."
TV still has its challenges: Viewers who skip ads with DVRs, or watch their favorite programs at times of their own choosing or watch shows on new screens that have little to do with the traditional ones in their living rooms, continue to resist marketers' promotional pleas. And the medium has more competition than ever before, thanks to the web, iPhones and video iPods, video-on-demand and video-sharing sites like YouTube.
And the future isn't certain. The introduction of web-enabled TV sets over the next several years could fracture an audience already sliced down to niches by cable outlets beyond any sort of workable mass, suggested Mr. Scanzoni. "There will be an impact to television usage, I believe," he said.
In the short-term, however, there has been some reversal of sentiment. Online, mobile and social are all capturing added consumer attention, said Mr. Bass, but consumers continue to spend more of their time with broadcast and cable TV.
Rushing in
The TV-ad marketplace is also seeing an influx of money that wasn't present last year, thanks to the roiled economy. Automakers and movie studios have moved quickly to secure placement in top shows and in prominent places in ad breaks, according to media buyers -- which has spurred other marketers to move in tandem.
Some marketers "came charging in, sucking up all the available time," said Benchmark's Mr. Atorino. "Certain advertisers may be worried they're getting shut out, so it's 'Let's get in now when we can.'"
Advertisers still need to reach broad swaths of consumers -- a feat that remains hard to accomplish as digital-savvy customers hop along a myriad of websites, Twitter feeds and Facebook friends. Indeed, at a time when media is splintering into hundreds of niches aimed at fans of Chinese cooking, outer space or amateur beer-making, to name just three possible topics, content that attracts large groups from various backgrounds might even warrant a premium in the years ahead, suggested Mr. Bass.
Evidence has also begun to emerge that the very same technology that gives rise to so many new ways of watching TV programs could also help the medium -- at least a little bit. The introduction of high-definition TV sets has the effect of getting people to watch more TV programming, according to PwC. What's more, advertisers looking to blunt the effects of the DVR have begun creating TV ads that are "visually more static," the consultant said, so that "recall rates remain solid even when ads are fast-forwarded."
Why Judging for International Awards Shows Is Broken
When Apple's IPod TV Ads Are Knocked for Being 'Too American' Something's Wrong
By Mike Hughes
Published: June 15, 2010
Each time I'm asked to judge an international creative competition, I'm honored. I love seeing the work. I love meeting the judges. I learn so much and I come away inspired.
There's only one problem with judging international awards: It doesn't work.
Don't get me wrong. It's fine when we're judging global campaigns aimed at a big, broad, multilingual audience. There's nothing wrong with a panel from around the world passing judgment on ads for universally known products such as Coke or Nike that can resonate universally. And usually a multilingual group of jurors has no problem judging purely visual campaigns for well-known products or services. The best of those campaigns are magnificent -- and they deserve the gold Pencils and Lions they attract.
But the vast majority of ad campaigns -- even the ones created by the hulking global agency networks -- aren't aimed at those big, broad, multilingual audiences. Rather, they're aimed at very specific demographics.
Those groups often share one language and one set of cultural references. They're often less critical about aspects of the work, like editing, than is a group of globetrotting creative directors, but on the other hand, they're tuned into parts of the local zeitgeist that hotshot creatives only know about if their planners and clients tell them.
Think of it this way: How well can a creative director from New York or London or Richmond, Va., evaluate a commercial targeting Japanese housewives? What if we've never heard of the brand, or even if we have, we have never sampled it or interacted with it? What if we don't know the brand's reputation in its home country? Maybe we simply don't know what's topical or fashionable in Tokyo. You'd have to put a gun to my head to get me to sit through an evening of Kabuki -- and yet Kabuki references might be perfect for Kabuki groupies.
In my view, the best American work of the last decade has been done for Apple by TBWA/Media Arts Lab. But I once heard a European award show judge dissing an Apple iPod TV spot as "too American." Now, maybe if the spot in question was meant for a European or African or Asian market, for example, it could have been "too American" to speak to those audiences. But none of the judges from around the world had seen the spot run in their home countries. When I asked the judge what he meant, he replied, "Americans like that upbeat stuff." That was enough for him to blackball it. I got the feeling he thought it was the job of Apple's advertising in America to make Americans more cynical -- more, you know, European.
Of course, I could very well have been applying the same xenophobic standards in the other direction. How do I know if that sexy TV spot from Brazil or the over-the-top humor in one from Sweden is appropriate for its audience or if it crosses the line? Foreign judges know Americans like me can be prudish whether we intend to be or not.
I confess that I often can't even tell how good the craftsmanship is on many foreign pieces of work. How do I know if the writing's sharp or if the use of local idioms is relevant when all I've got is a translation?
To my earlier point, international judging just doesn't work.
What's hardest about this realization for me is knowing how important winning awards is for the growth and success of our agency, and all agencies, as many of us have been built partly by clients being impressed by what they see in award books. Not to mention, I want the creative, account and planning teams here to be hungry for industry honors. I want to impress tough judges.
When my agency creates international campaigns, I will gladly and nervously submit them to the scrutiny of international judges. But I'm not going to shy away from using as many words as appropriate in campaigns aimed entirely at native English speakers just to improve my chances with a judge from Slovakia. And I'd hate to think judges from those places would make any compromises in their work just to impress this ugly American.
By the way, I also don't have much faith in the shows that purport to judge "effectiveness."
Don't get me started on that.
Jonah Hex -- Film Review
By Michael Rechtshaffen, June 17, 2010 02:30 ET
"Jonah Hex"
Bottom Line: Although Josh Brolin rises to the occasion, much of this comic book adaptation appears to have been abandoned on the cutting-room floor.
It admittedly starts off great guns, but all too quickly it becomes apparent that the big-screen arrival of the supernatural Western DC Comics series "Jonah Hex" is firing loud, empty blanks.
Although Josh Brolin is fine and dandy as the Civil War vet-turned-vengeful bounty hunter with one foot in the grave and a horrendously scarred face, the tortured anti-hero isn't alone when it comes to being cut to the bone.
Clocking in at a barely there 81 minutes (and that includes the extensive credits sequence), the pared-down end product plays like a generous highlights reel with little else remaining to thread together those explosive, CG-riddled action sequences.
Originally slated for an early August bow, the Warner Bros. release was bumped up to serve as young male-skewing counterprogramming to "Toy Story 3," but despite some entertaining bits and pieces, the overall picture unlikely will live up to fanboy Hex-pectations.
They'll tell you that Jonah Hex can trace his DC roots back to the early 1970s but that his life and times date back a century earlier to the Civil War-era Wild West.
The legend, at least according to the screenplay by Neveldine & Taylor (the "Crank" movies), has Hex left physically and emotionally mutilated at the hands of the crazed Quentin Turnbull (efficiently if predictably played by John Malkovich), who killed Hex's wife and child in retaliation for the death of his brother.
When Turnbull, believed to have been killed in a hotel fire, re-enters the picture with a nefarious scheme that will literally blow the Union apart, Hex is recruited to finally settle a long-standing score.
In the process, there's no shortage of firepower, but something is missing -- and not just a good chunk of the movie.
Hex eventually will always get his man, but director Jimmy Hayward ("Horton Hears a Who!") fails to capture that all-important graphic comic tone that would have been a natural for the sensibilities of, say, Sam Raimi, the Coen brothers or Robert Rodriguez.
What one ends up with is something that comes precariously closer to the Barry Sonnenfeld misfire, "Wild, Wild, West," especially by the third act.
Brolin's on-the-money turn aside, it's hard to gauge the other performances given how much of them seem to have been excised, particularly where the likes of Michael Shannon, Aidan Quinn and Tom Wopat are concerned.
Megan Fox fails to bring much of a spark to her role of Lilah, the New Orleans prostitute who keeps a candle burning for Hex.
What does get left onscreen certainly looks terrific, with cinematographer Mitchell Amundsen and production designer Tom Meyer getting quite resourceful with the Louisiana locations; composer Marco Beltrami and heavy metal outfit Mastodon provide the necessary sonic grit.
Opens: Friday, June 18 (Warner Bros.)
Production: Legendary Pictures, Mad Chance, Weed Road
Cast: Josh Brolin, John Malkovich, Megan Fox, Michael Fassbender
Director: Jimmy Hayward
Screenwriters: Neveldine & Taylor
Executive producers: Thomas Tull, Jon Jashni, William Fay, Matt LeBlanc, John Go
6/15/2010
Chinese director calls Weinstein 'a cheater'
Mogul bashed in absentia at Shanghai film fest
Harvey Weinstein (Getty)
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SHANGHAI -- Harvey Weinstein drew tough criticism at the Shanghai International Film Festival forum on Sunday from popular Chinese director Feng Xiaogang, who accused him of promising financial backing then backing away.
"Harvey is a cheater in the eyes of many Chinese moviemakers," said Feng, whose credits in the region include "Dream Factory" and "If You Are the One." The director, whose films are not as well known in the West, did not offer any specific charges.
Weinstein didn't exactly invite goodwill at the discussion by making a brief appearance there himself, only to leave abruptly, shake Feng's hand and excuse himself to catch a plane.
"Let me talk about Harvey, now that he's gone," Feng teased the crowd of a few hundred, mostly-Chinese industry observers gathered at the Crowne Plaza Hotel.
The attack, in absentia, proved lively and finally led to a broader discussion of Sino-Hollywood cooperation, hitting issues from co-production to copyright ownership and distribution.
Later in the day, after hearing of Feng's choice words, an associate close to Weinstein pointed out his track record in Asia, including backing of Zhang Yimou's global blockbuster "Hero" and Chen Kaige's Palme d'Or-winning "Farewell My Concubine."
The source, who wished to remain anonymous, noted Weinstein respected Feng's work enough to have paid $500,000 for the rights to his Hamlet remake, "The Banquet," a domestic boxoffice disappointment. Repackaged as "Curse of the Black Scorpion," Weinstein sold 150,000 DVDs in North America, chalking up the best sales record for any of Feng's films in that territory.
But while still at the forum, Weinstein, in Shanghai to promote his WWII-era thriller "Shanghai," starring Gong Li and John Cusack and set to screen at the festival Sunday night, spoke supportively of his contributions in the region.
"It seems to me that in the last five years Asia and China in particular are on the cutting edge of things," he said. "We intend to buy and make more movies in the area."
Feng said Hollywood executives were interested in buying Chinese films only as a symbol of friendship but without the intention of selling them and thus helping China's film industry grow.
China's newfound economic strength has not yet been accompanied by a global influence in the media, a shortfall many companies are scrambling to correct in the name of profit and under considerable pressure from the government.
Feng didn't restrict his criticism to Weinstein. He dismissed both "Hero" and "Crouching Tiger, Hidden Dragon," by Chinese American director Ang Lee as "Hollywood movies." "They're not Chinese movies," he said, again drawing scattered laughter and applause.
Collaborative efforts, to be sure, "Hero" and "Crouching Tiger" remain two of the highest-grossing Chinese-language films of all time.
On Friday, the Weinstein Co. bought the North American rights to the forthcoming martial arts epic "Reign of Assassins," starring Michelle Yeoh and co-directed by Su Chao-pin and producer John Woo.
Harking back to an earlier success story, Weinstein cited his 2001 repackaging of the 1993 movie "Iron Monkey," by Yuan Woo-ping. In Asia, he said, "there are no rules."
6/14/2010
LOS ANGELES (AdAge.com) -- After Hollywood's record year at the box office, it should come as no surprise that cinema advertising was one of the few kinds of advertising to win more revenue in 2009 than in 2008. But even the cinema industry's lift in ad revenue, which increased 2% to $584 million according to a new report from the Cinema Ad Council, didn't keep pace with the movie-going audience, which increased 6%.
The picture for 2010, however, is a much different story. The stunted growth last year stemmed largely from cutbacks in local advertising, which accounted for 20.6% of cinema ad spending but dropped 9.6% from 2008, according to Mike Chico, president and chairman of the Cinema Ad Council as well as exec VP-ad sales for cinema rep firm Screenvision. Many of those local dollars have already returned in the first half of 2010, accompanied by significant spending increases by national advertisers marketing packaged goods, healthy and beauty products, cars and retail. "We've seen double-digit growth collectively in the first two quarters," Mr. Chico said, referring to the cinema industry at large.
The largest cinema ad sales firm, National CineMedia, has already reported a 12.8% gain in first quarter ad revenue, for a total of $67.8 million, and projected an increase of 6% to 8% in the second quarter. Its growth is largely due to first-time spending from brands that hadn't used cinema before, including marketers in the electronics, package-goods, video game, confection and automotive categories, according to Cliff Marks, president of sales and marketing at the company. And then there's a significant lift in spending from Kraft Foods, which recently moved several million of its TV dollars into cinema for brands such as Oscar Meyer Lunchables, Ritz Crackers and Stride gum.
National CineMedia got advertising from nearly 200 national brands last year, up from 30 when it debuted in 2002, Mr. Marks said. "When we started this our only real customers were video games, automotive and military," he said. "If you look at us today, any brand that considers a 12-to-34 audience will have cinema in their consideration set."
3-D has also been a source of growth for cinema. Since Screenvision debuted the first 3-D cinema ad last summer, the company has booked three more 3-D campaigns, including ads for the Air Force and Friskies cat food. National CineMedia has also picked up 3-D buys from Samsung, Sprint and Lexus.
Producing 3-D ads generally cost marketers an extra $20,000 to $50,000 in production costs, but can lead to some of the industry's strongest results in measures such as ad recall and purchase intent, Mr. Marks said.
National CineMedia recently hired a dedicated creative director to speak to agencies such as BBDO, RPA, McCann Erickson, Wieden & Kennedy and others about how to create ads using 3-D.
During the July 2 opening of Paramount's "The Last Airbender," Lexus will become the first automotive brand to create a 3-D ad, airing a 3-D version of its new "Pitch" campaign for the Lexus LFA, created with Saatchi LA and Team One. In the spot, the car is showcased for its ability to generate a musical pitch that can break a champagne glass.
"That sort of beautiful and dramatic kind of action works in a 3-D format when you're looking at the car and watching the glass fly across the screen," said Deborah Senior, Lexus's corporate manager-advertising, brand and product strategy.
Next on cinema's priority list? Capitalizing on digital media such as websites. National CineMedia recently formed an ad network comprised of about 20 movie review and entertainment sites -- including Flixster, Rotten Tomatoes and Examiner.com -- to go after advertisers who want to reach movie fans on opening weekend, but also several weeks ahead of a film's release. The network has attracted cross-platform buys from 15 National CineMedia clients, including a first-ever cinema buy from Lowe's.
"It's not huge revenue yet, but we're seeing more and more brands saying, 'Of course, I get it,'" Mr. Marks said. "The movie-going experience happens before, during and after a fan goes to the theater. What cinema is doing is just touching the 'during.' Now we have a chance to reach those consumers at the other touchpoints."
The extra revenue earmarked for the sites will be reported to the Interactive Ad Bureau and not reflected in future Cinema Ad Council industry revenue reports.