Box-office futures exchanges dealt blow by Senate panel
Don't start planning your first box-office bet yet.
The Senate Agriculture Committee on Wednesday passed the Wall Street Transparency and Accountability Act, which includes in it a provision banning futures trading on movie box office. This is a big blow to Indiana-based Media Derivatives and Wall Street firm Cantor Fitzgerald, both of which had been given the green light to create their box-office futures exchanges by the Commodities Futures Trading Commission.
The major studios are fiercely opposed to futures contracts related
to the movie industry, maintaining that the proposed markets could be
manipulated and would create bad publicity for films before they reach
theaters. The studios' chief lobbying group, the Motion Picture Assn. of
America, has teamed up with the National Assn. of Theater Owners, the
Directors Guild of America and the Independent Film and Television
Alliance in a push to block the contracts.
In a statement, MPAA President Bob Pisano thanked the agriculture committee and added that the plans for these exchanges are "based on a faulty understanding of the film business and could cause real financial harm to both the film industry and other Americans drawn in by an online gaming platform that could be easily manipulated.”
A spokesman for the Media Derivatives exchange declined to comment, and a spokesman for Cantor Fitzgerald did not immediately respond to a request for comment.
Although the provision in the bill from the Senate Agriculture Committee is a setback, it is not a death blow. This bill will be merged with another financial reform package that is being written by the Senate Banking Committee. There is also no bill yet in the House that would prohibit the movie futures exchange. On Thursday, the House Agriculture Subcommittee on General Farm Commodities and Risk Management will address the topic in a hearing at which Pisano will testify.
-- Joe Flint