Box-office futures ban headed toward law, dashing plans of proponents [updated]
In a significant and possibly fatal blow to controversial proposals for box-office futures markets, a ban on them has survived a marathon House-Senate negotiation over financial reform legislation and will likely be passed by Congress next week and then signed into law.
The provision, which was inserted as a result of lobbying by the Motion Picture Assn. of America and others on behalf of the six major movie studios, would make box-office results only the second type of commodity on which futures trading is banned by law, along with onions.
It was included in the original version of financial reform legislation passed by the Senate, but not the House, leading to questions over whether it would survive in the final bill.
The MPAA and its allies including the National Assn. of Theater Owners and the Directors Guild of America have said box-office futures trading would skew public perception of movies before they open and could be manipulated. Supporters said such futures contracts would be a useful financial tool for the entertainment industry.
In a brief statement, MPAA Interim Chief Executive Bob Pisano said, “We are heartened by the conference committee’s actions and look forward to the full House and Senate approving the legislation.”
Representatives for Media Derivatives and Cantor Exchange, the two box-office futures markets that have been seeking to launch this year, declined to comment. However, earlier this week, Media Derivatives chief Robert Swagger said his company would try to launch even if the ban is passed because it has already received all necessary regulatory approvals from the Commodity Futures Trading Commission and believes it would be "grandfathered" into law.
If it does attempt to launch despite a legal ban, the courts will likely decide the ultimate fate of box-office futures.
[Update, 1:39 p.m.: An MPAA spokesman said the wording of the ban on box office futures was tweaked in conference committee to make it retroactively effective to June 1. That was before the CFTC approved the trading of a contract on the Media Derivatives market, which will make it more difficult for Swagger to argue that his company should be allowed to go ahead despite the ban.]
The CFTC will issue the second of two necessary rulings related to Cantor on Monday. If it gets the go-ahead, which appears likely given its similarity to Media Derivatives, a spokeswoman said the company will discuss its future plans then.
-- Ben Fritz