Lions Gate has broken ranks from the Hollywood opposition to movie futures trading, coming out in support Thursday to proposed markets based on box-office projections.
And apparently, Lions Gate isn't alone.
The studio's maverick position was voiced during Congressional testimony Thursday, as officials on both sides of the controversial issue convened in front of a House Agriculture Committee panel.
During his testimony, Richard Jaycobs, president of Cantor Exchange, one of two financial firms looking to establish movie-futures markets, read a letter from Lions Gate vice chairman Michael Burns. He said the markets “would allow a diverse group of motion picture industry participants, including studios, film distributors, theater owners, investors and other financial intermediaries within the motion picture industry to manage their risk and exposure to new film releases.
“We believe a market in domestic box office receipts would substantially widen the number and breadth of financing sources available to the motion picture industry by lowering the risk inherent in such financing,” Burns wrote.
Notably, Burns is a former Shearson Lehman Brothers employee who co-founded the Hollywood Stock Exchange, the popular play-money box-office trading site purchased by Cantor several years ago.
Jaycobs -- both in his oral and written testimony -- said that despite the movie industry's attempt to present its opposition to trading as a united front, a number of smaller studios and theater owners support the trading.
For their part, operators behind prospective box-office derivatives exchanges faced skeptical legislators.
“It is going to take some convincing to me that this is a good idea. I see this as ripe for manipulation,” said U.S. Rep. Kurt Schrader, D-Ore. “It would be sheer folly, in the middle of the greatest derivative crisis, to do something that would be pure gambling.”
Robert Goodlatte, R-Va., also questioned the wisdom of the proposed markets, which are currently in an approval process being overseen by the Commodities Futures Trading Commission.
“It seems to me we are not talking about a commodity,” he said. “The very people who know best will not be able to trade. It’s not like a barrel of oil. There’s only so much you can say about a barrel of oil. [Movie futures trading is] subject to manipulation.”
He suggested movie reviewers could write reviews to push up or down the cost of contracts.
The Motion Picture Association of America, which has led a powerful Hollywood lobby against the new exchanges, continued to hammer home its message, with organization president and interim CEO Robert Pisano telling the panel the very idea for the markets is “brought to you by producers who brought you the derivative debacle."
He also said the proposal for movie futures is unlike other futures trading contracts.
“There is no market for box office receipts," he noted. "There is no market in receipts. You can’t buy them or sell them. The functional equivalent is a cow or an ear of corn. A movie is a unique product, subject to manipulation.
