Futures Trading for Movies?April 17, 2010
The Commodity Futures Trading Commission (CFTF) unanimously approved the creation of one of two proposed markets that backers say would allow movie studios and financiers to hedge the risk of their investments in motion pictures.
The CFTC noted that speculative derivatives have repeatedly proven their societal value in housing, oil, and electricity. By extending these derivatives to the movie industry, regulators believe that Hollywood bomb-makers can be insulated from their actions, while still protecting the industry's wealth. Moreover, unsuspecting consumers can continue to pay increasingly astronomical theater prices for increasingly awful movies. Horrendous movies can be bundled with mediocre movies and resold in a secondary market. The magically evaporating risk can then free producers to try newer, riskier movies.
"This is really a wonderful development for us," stated Elaine May, writer and director of Ishtar. "I've already had discussions with Warren [Beatty] to package Reds and Ishtar together. We think that Martin Brest will also be very interested in packaging Gigli with these two movies. Buyers will be thrilled at this new product."
Other Hollywood moguls were less than enthusiastic. The Motion Picture Assn. of America has waged a campaign to stop futures contracts related to the movie industry. They have argued that the markets are ripe for manipulation and will create negative publicity for films before they are released. Movie critics have jumped on board with this argument, pointing out that it is their responsibility, not the consumers', to doom movies prior to release.
Posted by Contributing Editor Clavin
http://www.latimes.com/business/la-fi-ct-futures17-2010apr17,0,7568853.story
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