Approves financial reform legislation that includes ban on box office futures trading; bill now goes to Obama for signing
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.”
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.
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 in the wake of pending congressional action, despite receiving approval 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, who were afraid that the box office trading could quickly lead to more negative talk about movies in an attempt to influence the trading. There also were concerns that the trading could hurt box office grosses, increase costs and create a nightmare of issues for studios in dealing with personnel with inside information on potential grosses.
Studios also argued that the trading couldn’t really be used to hedge investments in movies and that trading based on movie box office grosses was more like betting than commodities trading. They said any studio that moved to hedge its investment of a movie would find itself unlikely to ever deal with the movie’s producer or director again.
Cantor and Media Derivatives, with support from some Hollywood investment advisers and one studio, Lionsgate, argued that the futures could not only be used to hedge investments but could bring in millions if not billions more dollars to support movie production.
They said hedging, by helping to cap potential losses, would make investing in movie futures more appealing. They also said that while the six studio members of MPAA may not need the investments, other studios would use it.
They also suggested the MPAA’s opposition was based on false fears that would quickly evaporate.
Cantor and Media Derivatives won at the CFTC, but then Sen. Blanche Lincoln (D-Ark), chairman of the Senate Committee on Agriculture, Nutrition and Forestry, stepped in and added the ban to the pending financial-reform legislation.
Both Media Derivatives and Cantor had been trying to win approval of the movie futures contracts since early last year. MPAA and the Hollywood unions began fighting the move early this year.