The Art Directors Guild has put the finishing touches on its controversial merger with two smaller unions representing illustrators and set designers.
The three-way merger was one of the last acts of Tom Short before he retired last year as president of the umbrella labor organization International Alliance of Theatrical Stage Employees. Short argued the combination would strengthen the bargaining clout of the guilds and reduce turf fights between them.
But the action was deeply unpopular among members of Local 790 (illustrators and matte artists) and Local 847 (set designers and model makers). Members of the locals voted it down, fearing they would lose autonomy and be forced to join a union dominated by art directors who act as their supervisors.
Despite the opposition, the National Labor Relations Board refused to block the merger at the request of the locals.
The Art Directors Guild said Thursday that it had completed a restructuring to combine the operations of the three unions that included naming a new 20-member board with reps from each of the crafts.
As expected, Scott Roth will remain as executive director the Art Directors Guild, which now has 2,000 members, up from 1,500. Marjo Bernay, former business agent of the two locals who was also elected a trustee on the new board, is negotiating a possible ongoing operational role in the union.
"We're looking forward to working cooperatively with all the crafts working under the same union," Roth said in a statement. He said there would be no layoffs as a result of combining the staffs.
Joseph Musso, former president of Local 790, who opposed the merger, said he and others have little choice but to go along with the new marriage. "We're trying to make the best of something that we're not totally enthralled with," said Musso, who is a member of the new executive board.
-- Richard Verrier
Activist shareholder Carl Icahn is tightening his grip on Lions Gate Entertainment, revealing for the first time that he may seek board seats to increase his influence over the company’s Santa Monica movie and TV studio, according to a recent regulatory filing.
There is speculation that Icahn, who just upped his stake to 14.3%, will look to put son Brett on the board. The 29-year-old, who works closely with his father at Icahn Partners, has been the point person between the investment firm and the management of Lions Gate led by Chief Executive Jon Feltheimer and Vice Chairman Michael Burns.
Although the two executives have so far had a good working relationship with Icahn, according to a person close to the investor, the billionaire is also known to push for changes if a company continues to stumble badly. Lionsgate stock recently posted poor fiscal third-quarter results due to the weak performance of its movies. That said, over the weekend, the studio had the top-grossing movie at the box office when “Tyler Perry’s Madea Goes to Jail” debuted with $41 million in ticket sales.
In a filing with the Securities and Exchange Commission this week, Icahn said he may seek to add members to Lions Gate’s board either by expanding the board or by “removing individuals." He also said that such an action could occur at Lions Gate’s next annual shareholders meeting, typically the second week of September, or a “special" meeting could be called earlier.
Brett’s name first emerged in a story this morning posted online by the New York Post.
In a brief phone interview Wednesday, Brett Icahn declined to comment on any moves that his father is making on Lions Gate, including whether he will request a board seat. He acknowledged that the Icahns are in close contact with Feltheimer and Burns. “Absolutely, we’ve talked to management before,” he said.
-- Claudia Eller
Photo: Mark Lennihan/Associated Press
Rupert Murdoch issued the following memo to News Corp. employees to announce that Peter Chernin would not be renewing his contract:
February 23, 2009
Today, we are announcing that Peter Chernin, our President and COO, will not be renewing his employment contract. Peter will be taking up the opportunity to start a new motion picture and television production venture with Fox.
Many of us who have worked with Peter over his 20 years with the company can attest to his leadership, his diligence, and his wisdom. I can also testify to Peter’s friendship, dedication, and honesty. He has been a close colleague and an ally to me for many years.
While Peter has distinguished himself at News Corp, he has also, increasingly and tirelessly, circled the globe in support of Malaria No More, which has achieved nothing short of remarkable results. Let us all wish him the best of luck, and the greatest success, as he embarks on this new chapter of his career, both as a professional and as a role model for an executive who gives back.
As you all know the downturn we are operating in is more severe and global than anything we have seen before. No company is immune to its effects. I want to take this opportunity, today, to write to you about how we will manage such an important leadership transition, and why I am convinced that today our company is not only well-positioned financially and competitively, but is on the cusp of a new phase of growth. Remember, we began priming ourselves for a weakening economy over a year ago. We have managed expenses and capital expenditure prudently, and strengthened our balance sheet. Following the partial sale of NDS, we will have over five billion dollars in cash, and this year we should exceed $3.5 billion in adjusted operating income.
I wanted to let you know that I have decided to leave News Corporation when my contract expires on June 30th.
This is not a decision that came easily, but after more than 12 years in my current job, 20 years at Newscorp, and 30 years of corporate life, I am ready for new entrepreneurial challenges. I would not be making this difficult decision if I were not confident in the superb management team we have at Fox and in the visionary leadership of Rupert Murdoch. I have worked closely with Rupert every day, and I know he shares my belief that Fox executives are the best in the business.
I want to thank Rupert for his remarkable support, encouragement and friendship over the years. No company in our industry can match News Corporation's track record of creating opportunities for employees and there is no better example of that than the opportunities Rupert has given me over the years.
I also want to thank all of you for the privilege of working side by side with such a talented and deeply principled group of colleagues. I am not only deeply proud of your achievements, but even prouder of the character and integrity of the company.
Over the next several months, Rupert and I will work closely to make sure this is a smooth transition for everyone. Thank you for the dedication and enthusiasm that you have always shown and I know will continue to show as the company moves forward to even greater heights.
In this Aug. 5, 2008 file photo, Peter Chernin, president & COO of News Corp., is seen on the floor of the New York Stock Exchange. News Corp. on Monday, Feb. 23, 2009 said Chernin will leave the company in June. (AP Photo/Richard Drew, file)
The board of the Screen Actors Guild, as expected, rejected the "final offer" by the Hollywood studios for a new contract covering the union's 120,000 members, creating fresh uncertainty about whether and when the seven-month labor dispute will end.
The rejection was widely anticipated because the studios' proposal contained a provision that SAG negotiators viewed as a non-starter. Nonetheless, the move is likely to deepen anxiety in the movie industry, where production activity has already slowed.
The studios and SAG appeared close to striking a deal earlier this week after the union's negotiators made what they said were key concessions, including accepting a framework for how actors will be paid for their work in content distributed on the Internet. That framework is modeled upon terms agreed to by three other Hollywood talent guilds.
But SAG negotiators balked at the studios' demand that the union's contract expire in three years, rather than two years. Studio executives insist that a three-year contract is necessary to ensure stability. A three-year deal, however, would mean SAG's contract would expire a year later than the labor contracts of the American Federation of Television and Radio Artists, and the writers and directors guilds. SAG leaders believe that would weaken their bargaining clout by preventing them from joining forces with the other unions in the next round of contract negotiations.
In a statement, SAG accused the studios of inserting a "last-minute and surprise demand" that was not brought up in earlier negotiations, including during federal mediation talks in November.
"By attempting to extend our contract expiration one year beyond the other entertainment unions, the AMPTP (Alliance of Motion Picture and Television Producers) intends to de-leverage our bargaining position from this point forward. ... The AMPTP has clearly stated their need and desire for financial certainty and industry peace. This new proposal does the exact opposite, and will only result in constant negotiating cycles and continued labor unrest."
The AMPTP responded that its offer was “strong and fair” and that it had always sought a three year deal with SAG. "We have kept our offer on the table -- and even enhanced it -- despite the historically unprecedented economic crisis that has clobbered our nation and our industry."
SAG's board stopped short of asking union members to approve a strike, fearing that the deep recession makes this the wrong time for such action. People close to the union, who did not want to be identified because they were not authorized to speak on the record, say the next logical step for SAG representatives is to initiate back-channel contacts with some senior studio executives to see if a showdown can be averted (typically, negotiations are conducted through the studios' negotiating arm, the Alliance of Motion Picture and Television Producers).
Meanwhile, SAG is preparing to begin negotiations Monday with producers of commercials, which are covered under a separate contract.
-- Richard Verrier
UPDATE: Disney says the reorganization will also create one group to identify "development opportunities" for the parks, not "acquisitions." The previous information was based on a statement erroneously provided by the company.
The Walt Disney Co. has announced a broad restructuring of its parks and resorts operation -- a move that sets the stage for more job cuts in the coming weeks.
The large-scale reorganization, which encompasses Disneyland, Disney World, cruise ships and resorts that it runs in places like Hilton Head, S.C., comes on the heels of last month's buyout package offers to 600 parks executives.
"These changes are essential to maintaining our leadership position in family tourism and reflect today's economic realities," Jay Rasulo, Parks chairman, said a statement.
Under the new structure, facets of Disneyland and Walt Disney World will be consolidated into a single domestic operation, to be headed by Worldwide Operations President Al Weiss.
Rasulo said the company would streamline its operating structure to simplify the operations -- and in the process, reduce overhead. He said the reorganization was a further step in an operational review begun in 2005 at Walt Disney Parks and Resorts, although he acknowledged that the bleak economy has accelerated the pace of the changes.
Disneyland Resort President Ed Grier and Walt Disney World Resort President Meg Crofton will continue to oversee the ride operations and other facets of customer attendance. However, Weiss' group will take over functions that cut across parks, such as procurement, menu planning and ordering stuffed animals.
The operations of Walt Disney Imagineering group will also be simplified. Chief Creative Executive Bruce Vaughn and Chief Design and Project Delivery Executive Craig Russell will continue to oversee the development of attractions for all Disney parks and resorts. But the group will no longer have separate groups devoted to development for resorts, entertainment and attractions.
A new global business development team will combine real estate development and business development under Executive Vice President Nick Franklin.
The changes are intended to streamline the organization and create one group that identifies possible acquisitions and park expansions, another that implements it and a third that is in charge of operations, company officials said.
The restructuring probably will result in job cuts, on top of the buyouts offered in January. It's unclear how many positions will be lost.
"Organization changes require difficult decisions, including the elimination of some roles," Rasulo said. "These decisions were not made lightly and we know this will be a challenging transition. The people affected are our friends and colleagues"
--Dawn C. Chmielewski
Photo credit: Timothy O'Rourke / Bloomberg News
CBS Corp., seeking to stave off a cash crunch and a downgrade its credit rating, slashed its dividend by more than 80% to 5 cents a share from 27 cents.
The broadcasting giant, releasing fourth-quarter results after the market closed, said net income plunged 52% to $136.1 million from $286.2 million in a year earlier.
Revenue was down a more modest 6% to $3.5 billion for the quarter compared with nearly $3.76 billion for the same period in 2007. The company attributed the lower top line to advertising weakness, partially offset by higher affiliate revenue from Internet media company CNet.
The dividend cut was even larger than Wall Street analysts had been expecting.
Chief Executive Leslie Moonves explained the reduction by pointing out that CBS had long been generous with its cash to investors but the economy now required the company to adjust its policy.
"CBS continues to produce strong cash flow, and we have returned $5.5 billion of that cash to shareholders in just three years as a stand-alone company," Moonves said. "However, by taking this step now, we will further strengthen our financial flexibility to meet our debt obligations even in difficult credit markets, and still provide our shareholders with an attractive dividend.”
Said CBS Executive Chairman Sumner Redstone, “We are clearly in the midst of one of the most difficult financial environments in history, with very little visibility on how long these economic conditions will continue or if there is worse to come."
Moonves, in a conference call with analysts, declined to give much guidance on the current first and upcoming second quarters. But he said he expected the second half of the year to be stronger for the company because CBS will have rerun revenue from the syndication of five TV shows "hitting the books" this fall.
-- Meg James
As the Screen Actors Guild and the major studios resumed contract negotiations today, Hollywood's below-the-line laborers wanted to deliver a message: "Let's get back to work."
About 100 film and TV workers, including cinematographers, studio drivers, makeup artists and prop makers, staged a rally this morning outside the Sherman Oaks headquarters of the Alliance of Motion Picture and Television Producers -- the negotiating arm of the studios -- urging the parties to "reach a speedy resolution to the current stalemate."
Rally organizers said their purpose was not to take a position on the contract dispute, but to convey a sense of urgency about how the continuing stalemate was creating hardships for entertainment industry workers.
"We decided we needed to be seen physically,'' said Ed Gutentag, a cinematographer and spokesman for the self-described "Let's Get Back to Work" coalition. "We're not taking sides, we just want to send a message that we're suffering by their inability to come up with a deal."
Actors have been working without a contract since June 30, creating an atmosphere of uncertainty that has contributed to a steep falloff in feature film production. The slowdown has been a double whammy for crew members, who were hit hard by the fallout from the 100-day writers strike last year.
Hope Parrish, a property master, says she hasn't worked in eight months, the longest stretch in her 29 years in the business. "Nobody is starting any projects,'' said Parrish, who worked on "The Curious Case of Benjamin Button." "I would like to see the producers negotiate a good deal with the actors so we can get back to work."
Many of the protestors belong to the International Alliance of Theatrical Stage Employees, which is grappling with its own contract issues with the studios. IATSE members are about to vote on a controversial contract that includes widely unpopular cuts in health benefits, including extending the number of hours members have to work to keep their health insurance benefits.
Also joining the rally were about 50 supporters from the Membership First faction at SAG, who've been at war with the union's board members over the firing of former executive director Doug Allen. Membership First fears the new negotiating team will capitulate to the studios, short-changing what actors earn from shows distributed on the Internet. In that spirit, they carried signs declaring, "SAG Board Sells Us Out Again" and "Vote No on Contract."
So, here's a new twist on movie promotions.
20th Century Fox has produced a three-part trailer to promote its big-budget summer release "X-Men Orgins: Wolverine" that will run as separate 60-second spots beginning Sunday on the studio's TV shows "Family Guy," "House" and "American Idol."
Immediately after Tuesday's broadcast of the final "Wolverine" spot on "Idol," all three trailers — which together form a narrative — will appear on Yahoo.
The fourth "X-Men" movie, which debuts in theaters May 1, is one of this summer's most highly anticipated releases. The spinoff of the three earlier films, which have generated a total of $1.2 billion in worldwide ticket sales, traces the origins and transformation of the the mutant played by the humanly handsome Hugh Jackman into Wolverine. The studio is billing it as the first chapter in the X-Man saga that unites Wolverine with other legends in the X-Men character "universe."
Fox says the fourth installment of the Marvel Comics movie cost about $100 million. That would be considerably less than the cost of the 2006 sequel "X-Men: The Last Stand," which reportedly carried a price tag of more than $200 million. Why cheaper? For one, Jackman is the only major star in this "prequel." And Halle Berry, who appeared in the first three films, doesn't have a role. Nor was "Wolverine" directed by Brett Ratner, who made the last film, but rather Gavin Hood, who won the 2006 best foreign film Oscar for the low-budget crime drama "Tsotsi" and has never handled a big franchise picture.
— Claudia Eller
Photos from "Wolverine" courtesy of Fox
News Corp. Chief Executive Rupert Murdoch (above right) is in Los Angeles this week and next week to meet with top Fox executives on the West Coast.
Murdoch's presence, and his scrutiny of the company's entertainment businesses, has prompted increased speculation that Peter Chernin (above left), president and chief operating officer of News Corp., actually might be leaving the company after 20 years. Chernin's contract expires in June. Chernin has been particularly tight-lipped about his plans, fueling anxiety among Fox executives who want to keep Chernin, who is admired by both Wall Street and Hollywood power players.
Chernin declined to comment.
Murdoch flew into Los Angeles from Australia this week after celebrating the 100th birthday of his mother, Dame Elisabeth Murdoch, along with about 600 friends. The 77-year-old Murdoch is fond of saying that his mum's longevity bodes well for his own prospects of remaining at the helm of News Corp. for many more years.
Succession issues have bedeviled the company because Murdoch wants one of his children (he has six) to eventually run the global media empire that includes the 20th Century Fox film studio, Fox Broadcasting network, cable television outlets that include Fox News Channel, social network MySpace and a string of newspapers that includes his recently acquired jewel, The Wall Street Journal.
Some on Wall Street worry that Murdoch's kids are not ready to manage the sprawling businesses that generated $33 billion in revenue last fiscal year. What's more, it would be a particularly awkward time for a major executive transition because the recession has hammered media companies that depend on advertising and consumer spending for such non-essential purchases as DVDs.
Last week, News Corp. reported a $6.4-billion loss for the quarter ended Dec. 31. Its stock is down 65% from a 52-week high of $20.49.
During a conference call with analysts to discuss the results, Chernin seemed to play a less prominent role than he has in the past. Murdoch dominated the session, fielding questions about the entertainment properties that have long been Chernin's specialty.
Then there was the sticky issue of Chernin's contract.
Back during November's earnings call, when Murdoch and Chernin were asked to characterize the negotiations, Chernin called them "constructive." Murdoch quickly jumped in: "I would characterize them as constructive and friendly."
But last week, the same question prompted a more measured response. "Peter and I are continuing our conversations and they're private and that is all there is to it," Murdoch said. "Nothing more for me to say and we won't take any further questions on that. It is a confidential matter."
Chernin remained silent.
Murdoch's tour through Los Angeles is part of a strategic review of the company's businesses that takes place every three years, say people familiar with the situation who did not want to be identified in discussing the sensitive subject. Murdoch will hold two more weeks of meetings with top Fox executives this month in New York.
If Chernin were to leave News Corp., he would be available to step into the top job at any number of troubled media companies, of which there appears to be no shortage.
People close to Chernin said it would be hasty to draw a conclusion about Chernin's tenure and Murdoch's visit (the CEO comes here more often than people think, they said). Chernin, 57, has been known to take his employment negotiations down to the wire. His last contract renewal, in July 2004, was announced three days before the new agreement went into effect.
— Dawn C. Chmielewski and Meg James
Photo: Daniel Acker/Bloomberg News
Billionaire Sumner Redstone, who has been under pressure to restructure his family company's $1.6 billion in debt, said this morning that "substantial progress" had been made in talks with banks.
"An agreement is now within reach," the 85-year-old Redstone said during a conference call to discuss Viacom Inc.'s quarterly earnings.
In October, Redstone got caught in the stock-market avalanche, which created a credit crisis for the mogul, who owns controlling stakes in Viacom -- which owns MTV, Nickelodeon, Comedy Central and Paramount Pictures movie studio -- and television and radio broadcasting behemoth CBS Corp.
His family company, National Amusements Inc., was forced to sell non-voting shares in Viacom and CBS at record-low prices to come up with cash to satisfy bankers after National Amusements defaulted on bank loans. Since late last fall, National Amusements -- led by Redstone's daughter, Shari Redstone -- has been working closely with banks to restructure the company's debt.
A December deadline for National Amusements to repay $800 million in bank loans was extended into this year, a signal that the elder Redstone might be able to pull off his high-wire credit act and save his media empire. In December, National Amusements jettisoned its ailing video-game company and said that it would sell some of its movie theaters to pay down debt.
Redstone did not say when he expected an agreement would be reached, and he declined to answer questions. However, two people close to National Amusements said this week that a deal could come within the the next few weeks.
-- Meg James
DreamWorks Animation Chief Executive Jeffrey Katzenberg made a mea culpa on Wednesday, saying that the Motion Picture & Television Fund had done a poor job of communicating the reasons for its decision to close the hospital and nursing home.
"We give ourselves a failing grade," said Katzenberg, who chairs the charity's fundraising board. "This has not been communicated well."
But Katzenberg and other board members stood by their decision, describing it as a necessary move to preserve the viability of the organization and its various other programs, which includes six healthcare centers, child care services and a retirement community in Woodland Hills with 215 residents.
"We have made a decision that allows this incredibly important enterprise to live on and have a great future," he said during a conference call with reporters, aimed at quelling fury among the residents' family members who are angry over the facility's closure.
David Tillman, the fund's CEO, said there was a $20-million gap between program revenues and the cost of services that was projected to widen because of rising medical costs and declining reimbursements from the government. In the past, he said, the fund could rely on investment income and philanthropy to make up the shortfall, but that option is no longer possible because of the deep recession.
Frank Mancuso, chairman of the fund's corporate board, said that the board had already taken various steps to stem losses, including closing the hospital's costly intensive care unit, but had run out of options. "We left no stone unturned," he said.
-- Richard Verrier
While several of Hollywood's financially strained independent production companies have either gone under or drastically scaled back operations over the past year, Fred Smith -- the founder and chief executive of FedEx Corp. -- says he's still committed to his side business: investing in movies.
For more than a decade, the Hollywood outsider who lives in Memphis, Tenn., has quietly bankrolled Alcon Entertainment, the boutique production outfit behind such films as "My Dog Skip" and "The Sisterhood of the Traveling Pants" series. His company may not be known for any blockbuster success and has had some box-office losers like the romantic comedy "Chasing Liberty" and its debut movie, "Lost & Found." But Smith claims that, thanks to solid performers such as the romantic drama "P.S. I Love You," starring Hilary Swank and Gerald Butler, and continued financial discipline, Alcon has been a profitable venture.
He attributes the company's stamina in what he readily acknowledges is "a very tough business" to the cost-conscious "no-limos" philosophy guiding Alcon's two chief executives, Andrew Kosove and Broderick Johnson. Despite being a Yalie, Smith hired the two Princeton alums after meeting them in 1994 and being impressed with their 220-page business plan for launching a movie company.
Smith said the duo's success lies in the fact that the pair has stuck to their original strategy for lowering risks inherent to the unpredictable movie business: Keep film budgets tight and overhead low; focus on specific genres like family films; and have a strong studio partner to help market and distribute the pictures (Alcon has a multi-year distribution deal with Warner Bros. and typically sells off the international rights in its films to help finance them).
"Those three things have proven that we're the exception to the rule," Smith said when he dropped by The Times to talk about the toll that the bad economy is taking on his main business --delivering packages.
Smith ducked a question about how much of his own money he's invested in the movie business. "It's mostly been done with borrowed money," he says, noting Alcon's good fortune last year in securing a $500-million bank loan before those kind of "slate-financing" deals dried up. Smith says he used his own FedEx stock to secure the loan.
The entrepreneur, who leaves the day-to-day running of Alcon to his two movie chiefs, says he reads the occasional script and rarely visits the set of his company's movies.
His personal Alcon favorite? Smith says its Jay Russell's family movie, "My Dog Skip," based on Willie Morris' World War II memoir about a boy and his dog growing up in a small Southern town. Made for $7 million, the 2000 release grossed $35 million at the worldwide box office and did well on video. Smith said he defies anyone to watch the movie "without a tear in their eye."
Smith insists he doesn't regret his own failings as a would-be movie star. He jokes that any ambitions he may have harbored were "left on the cutting-room floor" when his three-minute cameo in Fox's 2000 "Cast Away," starring Tom Hanks as a FedEx executive in a modern-day version of Robinson Crusoe, was "so bad, so atrocious, it was cut to 18 seconds."
Steven Spielberg's DreamWorks finalized a distribution deal with Disney today, giving the filmmaker key financial demands he failed to extract from his longtime studio alley Universal Pictures: a commitment to risk hundreds of millions in film prints and advertising costs and to share its valuable pay TV slots.
As part of the deal, Disney will also give DreamWorks -- which has been struggling to raise money for its new studio -- a cash advance of about $100 million and a potential $75-million credit line which Spielberg & Co. can draw on for future productions. Disney's total outlay of $175 million is taking the form of a loan and is not an equity investment.
But, here's the catch. While DreamWorks desperately needs the cash advance to get its slate of movies rolling, it can't access Disney's money until it raises the first phase of its debt financing -- $325 million -- which will trigger a matching equity investment by Spielberg's new studio partner India's Reliance Entertainment.
"Disney has given us all the support we need to be in a position to raise our money and launch our company," said Stacey Snider, partner and chief executive of DreamWorks.
DreamWorks initially hoped to close its bank financing by the the end of the first quarter, but that now appears to be unlikely. A person close to the matter said that a more realistic time frame is late April.
Spielberg and Reliance will continue to fund overhead at DreamWorks, which employs about 60 people, until the deal is completed.
Disney's distribution agreement calls for DreamWorks to deliver up to 30 movies over the term of the deal. DreamWorks hopes to make up to six films a year for Disney's Touchstone Films banner. The first release -- yet to be identified -- will be in 2010.
Disney will market and release the movies worldwide everywhere except India, where Mumbai-based Reliance retains the distribution rights.
The Burbank studio will advance all the prints and advertising costs in exchange for collecting a distribution fee of what could amount to as much as 10%.
DreamWorks will also be able to piggyback on Disney's pay cable deal with Starz Entertainment, which provides movie producers with a significant revenue stream worth hundreds of millions of dollars. Last year, DreamWorks had failed at an attempt to secure its own pay-TV deal with HBO.
Spielberg hooked up with Reliance last year in a 50-50 venture to relaunch DreamWorks as a new studio with hoped-for funding of $1.25 billion. Reliance agreed to match in equity what DreamWorks raises in debt, but those efforts have been greatly hampered by the global credit crisis.
Surprising news of a pending deal between DreamWorks and Disney came late last week after a previously announced agreement between the Spielberg studio and Universal Pictures fell apart. Last fall, Universal had beat Disney and other potential distributors to the punch by cinching the right to distribute DreamWorks new movies. But, as DreamWorks' attempts to raise all of its funding by early this year became derailed by the financial markets, Spielberg and Reliance put pressure on Universal to change the original terms of its distribution deal.
Among sticking points between Universal and DreamWorks was that Universal refused to put up hundreds of millions in funds for prints and ads of DreamWorks movies -- an extremely risky investment in the volatile film business. DreamWorks also wanted more movie slots from Universal's deal with HBO than the studio was able to provide.
-- Claudia Eller
Left photo: Steven Spielberg. Credit: Hector Mata / AFP
Right photo: Stacey Snider. Credit: Vince Bucci / Getty Images
Think of it as a repeat of the swearing-in of President Obama in "an excess of prudence."
The Screen Actors Guild board voted for a second time to oust former executive director Doug Allen and replace the union's negotiating committee with a newly appointed task force dominated by moderates.
The move was widely anticipated, given that the board had previously taken such a vote last month by means of a "written assent."
That action, however, was challenged in a lawsuit filed last week by SAG President Alan Rosenberg and three other directors. Rosenberg has been a staunch ally of Allen and had refused to accept the board's appointment of David White as interim executive director and John McGuire as SAG's new chief negotiator. Last week, a judge denied a request for a temporary restraining order, saying the board had acted within its rights.
Sunday's vote -- supported by 59% of the 71-member board -- delivers a further blow to Rosenberg's legal challenge, which had threatened to delay a resumption in long-stalled contract negotiations with the studios. Talks are expected to resume on Feb. 17.
-- Richard Verrier
DreamWorks' planned distribution deal with Universal Pictures has collapsed as the parties are unable to agree upon final terms.
The failure of the agreement paves the way for Walt Disney Studios, which had earlier sought a distribution deal with DreamWorks, to step in as Steven Spielberg's new studio home, according to people familiar with the situation.
DreamWorks has been struggling for months to raise funds for its new studio, but efforts to raise the debt portion of its desired $1.25 billion in financing has been hampered by the global credit crisis.
DreamWorks, which split from former owner Paramount Pictures last year, is in need of some serious cash to continue financing overhead and jump-start plans to make about six movies a year. Spielberg's businesss partner, India's Reliance Entertainment, will not put up the equity portion of the financing until DreamWorks secures a matching sum in debt. DreamWorks' lead bank, JPMorgan Chase, so far has received a commitment for less than half of the $325-million loan that Spielberg hopes to have by late March. At that point, Reliance would match the bank contribution. DreamWorks is seeking to raise a total of about $1.25 billion in equity and debt.
Reliance had been pressuring Universal to advance DreamWorks at least $150 million in interim financing. But Universal, which in October announced a multi-year distribution deal with DreamWorks, balked and this morning announced it had halted talks with DreamWorks. "Over the past several weeks DreamWorks has demanded material changes to previously agreed-upon terms. It is clear DreamWorks' needs and Universal's business interests are no longer in alignment," Universal said.
Disney, which had been one of several DreamWorks distribution suitors, is in talks with the Spielberg camp and apparently willing to step in and make the investment needed by the filmmaker. Disney has always been Plan B, although Spielberg's first choice was Universal, where he began his career. Spielberg's creative partner Stacey Snider, who runs DreamWorks, used to be chairwoman of Universal Pictures.
This is the second time that Universal let DreamWorks slip away over money issues. Before being sold to Paramount in 2006 for $1.6 billion, DreamWorks had been in serious negotiations with Universal. But at the eleventh hour, Universal lowered its acquisition offer and the deal fell apart.
-- Claudia Eller
UPDATED at 4:59 p.m.: With a judge having denied a temporary restraining order sought by Screen Actors Guild President Alan Rosenberg, the major studios are expected to resume contract negotiations with the union. Talks have been tentatively scheduled for Feb. 17 and 18, sources familiar with the talks say.
A judge rebuffed for the second time a bid by Screen Actors Guild President Alan Rosenberg to block the union's new negotiating team from reviving contract talks with the major studios.
Rosenberg and three other board members filed a lawsuit this week seeking to overturn a recent vote by a majority of board members that ousted the union's chief negotiator and disbanded the union's negotiating committee. They maintained the vote, taken by means of a "written assent," violated the state's business laws and the union's own bylaws.
But Los Angeles Superior Court Judge James Chalfant denied the request for a temporary restraining order, ruling that the board's action complied with the state law governing corporations. He also rejected arguments by Rosenberg's attorneys that a two-third vote was required to disband the committee.
The judge's decision removes what would have been an embarrassing setback for SAG. A restraining order could have unseated the union's newly appointed interim executive director and chief negotiator. They were tapped by the board after it fired former Executive Director Doug Allen, contending he mishandled negotiations.
Nonetheless, Thursday's ruling, which didn't dismiss the overall case, doesn't end the uncertainty over when contract negotiations with the studios will resume. Actors have been without a contract since June 30, 2008. SAG postponed planned negotiating sessions earlier this week because of the fight with its union president.
And it's unlikely studios would agree to return to the bargaining table as long as there is a pending lawsuit challenging the legitimacy of negotiations.
Eric George, attorney for Rosenberg and the other directors, said he would file an appeal in the next few days with the California Court of Appeal.
Ned Vaughn, spokesman for the Unite for Strength group that represents so-called moderate board members, hailed the judge's ruling and called on Rosenberg to drop his complaint.
"It's outrageous that this lawsuit has further delayed negotiations,'' he said. "It's time for Alan Rosenberg to drop this and accept that SAG members voted for change. They want it now."
Rosenberg, who attended Thursday's hearing, declined to comment.
Thursday's ruling marked a second setback for Rosenberg, whose initial appeal for an injunction was denied after the judge cited several technical errors in the complaint.
“I’m pleased that we can put this matter behind us and dedicate our complete focus to the needs of Screen Actors Guild members. There’s a lot of work ahead of us,” said SAG interim National Executive Director David White.
-- Richard Verrier
Is French media giant Vivendi souring on its investment in NBC Universal -- perhaps un petit peu?
Mais non, says Vivendi Chief Executive Jean-Bernard Levy.
Nonetheless, Vivendi plans to write down the value of its 20% stake in NBC Universal next month when the French company reports its quarterly earnings. For now, Vivendi won't discuss the amount of the anticipated noncash charge, which is necessary to reflect the lower valuation of the U.S. company that boasts the NBC broadcast network, cable channels USA Network, Bravo and MSNBC, and Universal Studios.
General Electric Co., whose stock has been pummeled in the market meltdown, owns the controlling 80% of NBC Universal. When GE and Vivendi combined their entertainment properties in 2004 to create NBC Universal, the enterprise was valued at more than $40 billion, making Vivendi's portion worth around $8 billion. (GE reiterated Tuesday that it had no plans to reduce the value of NBC that it carries on its battered books.)
"It's a tough environment, but we are very pleased with NBC," Levy said during an interview in Santa Monica. "We are pleased with the profits that NBC has achieved; the overall performance of NBC U has been very good."
Vivendi had an opportunity in December to divest its stake in NBC Universal -- but it chose not to. The timing was not right because of the U.S. media company's depressed trading multiples, Levy said. Vivendi intends to hang on to its interest until the market bounces back.
How long will Vivendi be part of the peacock company? Levy would not tip his hand other than to say, "We are not long-term owners." He added that his company prefers to be in the "driver's seat" of its investments, and that is not the case with NBC.
Still, Levy is a big fan of the guy behind the wheel, NBC Universal CEO Jeff Zucker.
"I like him very much, he is an excellent manager and he certainly knows his business," Levy said of Zucker. The two CEOs spent time together last weekend in Tampa, where they attended the Super Bowl, which was televised by NBC and generated huge ratings.
Levy now is expecting Zucker to make similar gains in the financial field. "We are happy that we will share in the potential value creation that he and his team will implement," Levy said.
-- Meg James
Photo of Vivendi CEO Jean-Bernard Levy by Alex Pham/Los Angeles Times
A judge on Tuesday denied a temporary restraining order sought by SAG President Alan Rosenberg to block negotiations between the union and the major studios.
Rosenberg and three other board members are seeking to overturn a recent vote by a majority of board members that ousted the union's chief negotiator and disbanded the union's negotiating committee, contending that the action violated the state's corporate code.
But Los Angeles Superior Court Judge James Chalfant denied the request for an injunction, citing several technical errors in the lawsuit, and ordered that the complaint be resubmitted. A hearing on the case will be held Thursday. The litigation has delayed contract negotiations that were set to resume this week.
"They are so desperate to hold on to their power that they are willing to burn down their own house,'' said New York SAG President Sam Freed, one of the board members being sued. Rosenberg declined to comment.
-- Richard Verrier
Financial news network Bloomberg Television today pulled the plug on its "Night Talk" program and bid goodbye to longtime anchor Mike Schneider.
Schneider's last program was Monday night.
Additional staff cuts and TV programming lineup changes are expected to be announced Wednesday. The moves are part of broad restructuring of the multimedia group, which includes Bloomberg Television and Bloomberg Radio, a person familiar with the situation said.
The private company, founded by New York Mayor Michael Bloomberg, generates about $6 billion a year in revenue.
But the shuffle has already begun. Bloomberg Television Managing Editor John Meehan left the company last week. His departure comes four months after former NBC, CBS and Sony BMG Music executive Andy Lack was hired to manage Bloomberg's television and radio operations. Lack brought in David Rhodes from the Fox News Channel to run the television operations.
Bloomberg operates 24 hours a day and has TV channels in 11 countries, but its sprawling operations are seen as disjointed and not making full use of its team of reporters in 143 bureaus around the world.
Although the company plans to eliminate programs and trim employees, it plans to hire additional staff this year to improve its programming to better position the company for growth, said the person familiar with the situation.
"While other news organizations are shrinking, we continue to expand, improving our existing products while investing in new ones," Bloomberg Chairman Peter Grauer said in a statement in October when Lack was hired.
-- Meg James
Summit Entertainment and Lionsgate aren't getting hitched. At least not yet, if ever.
The idea has been broached, according to insiders, but nothing is cooking. Such a corporate marriage, were it to happen, would unite a suddenly hot movie production company with Hollywood's leading independent movie and TV studio, which is behind the "Saw" and "Tyler Perry" franchises.
So far, however, Summit has played hard to get.
A few weeks before the late November release of Summit's box office smash "Twilight," the company headed by Patrick Wachsberger and Rob Friedman, was approached by Lionsgate about a potential merger. Lionsgate, well aware of the teen vampire film's hot pre-release buzz, made an offer for Summit but was rebuffed because the price was too low.
Lionsgate and Summit, which are located right around the corner from each other in Santa Monica, say privately that there have been no formal talks since last fall. That's not to say that Lionsgate Chief Executive Jon Feltheimer and Summit's Friedman, who are golfing buddies, would never discuss it between rounds. Who knows?
After all, "Twilight," which was made for $37 million and grossed $341 million worldwide, is a highly prized new movie franchise, one that would fit nicely with Lionsgate's strategy of producing moderately budgeted movies targeted at a specific audience. The sequel, "New Moon," based on the second novel of author Stephenie Meyer's popular four-book series, is due in theaters Nov. 25 of this year. The first film's director, Catherine Hardwicke, dropped out for the next installment and was replaced by Chris Weitz, whose previous credits include "The Golden Compass" and "About a Boy."
"Twilight" put the nearly 2-year-old Summit on the Hollywood map. The start-up's first five releases included such box office flops as "Penelope," "Fly Me to the Moon" and "Sex Drive." Next up for the production and international sales company is "Push," a supernatural thriller with Dakota Fanning that opens Friday, and "Knowing," a mystery thriller starring Nicolas Cage, on March 20.
Photos: Rob Friedman, left (Kevin Winter/Getty Images) and Jon Feltheimer (Vince Bucci/Getty Images)
To virtually no one's surprise, the Screen Actors Guild and the major studios announced late Wednesday that they will return to the negotiating table Tuesday to try to forge a new contract for actors.
The move comes only two days after SAG's board hired a new negotiator, John McGuire, and a new interim executive director, David White, following the ouster of Doug Allen. At the same time, the board formed a new "task force" to replace the previous negotating committee.
Moderates who orchestrated the shake-up are expected to move quickly to finalize a new contract, which will be modeled on deals secured over the past year by three other talent unions. Their challenge will be to obtain improvements over the studios' previous "final offer" that will be acceptable to members and demonstrate that the leadership didn't capitulate under pressure.
SAG members have been working without a contract since June 30.
-- Richard Verrier
Twentieth Century Fox has agreed to co-finance the third movie in the “Chronicles of Narnia” series, pending approval of the final script and shooting budget. If all goes as planned, Fox and Walden Media, which controls the movie rights to C.S. Lewis’ classic children's books, hope to begin production on "The Voyage of the Dawn Treader" by late summer so it will be ready for holiday 2010 release.
First, however, Fox and Walden have to hire a screenwriter to do another pass on the script that was last rewritten by Richard LaGravenese, whose credits include "Freedom Writers" and "The Horse Whisperer." The movie companies are looking to make the film for about $140 million. Michael Apted, who made "Amazing Grace" and the 1999 Bond flick "The World Is Not Enough," is on board to direct.
Fox is taking a financial gamble that Disney was unwilling to wage despite helping bankroll the first two films in the "Narnia" family franchise. Walden, owned by entrepreneur Phil Anschutz, was forced to seek a new financial partner on “Dawn Treader” after Disney balked at the cost and opted out.
Fox was the most likely partner because the studio already markets and distributes Walden movies under its Fox Walden label.
Over the last few weeks, Walden chief David Weil and “Narnia” producer Mark Johnson have held a series of meetings with top Fox executives, including movie chiefs Tom Rothman and Jim Gianopulos, to discuss script revisions and the movie's cost.
While the targeted budget of “Dawn Treader” is much lower than that of the last Narnia movie, “Prince Caspian,” which cost $225 million to produce, it's still a big gamble. Released by Disney last year, the sequel was much less popular than the first "Narnia" movie, “The Lion, the Witch and the Wardrobe.” The sequel grossed $419 million worldwide compared with its 2005 predecessor, which generated $745 million in ticket sales.
Disney and Walden hope that DVD sales of "Prince Caspian" will help pull the movie out of the red.
-- Claudia Eller
Photo: "The Chronicles of Narnia: Prince Caspian" is courtesy of Walt Disney Studios
Steven Spielberg, who amid the credit crunch has been having a tough time raising money to finance his new DreamWorks studio, appears to be getting there slowly but surely.
The filmmaker's lead bank, JPMorgan Chase, has received a commitment for about $150 million --nearly half of the $325-million loan that Spielberg hopes to have in place by late March. Only then will Spielberg's financial partner, India's Reliance Entertainment, begin forking over its matching equity portion so the director and his top movie executive, Stacey Snider, can start making movies.
A couple of weeks ago, Spielberg and Reliance paid Paramount Pictures about $27 million to buy 17 projects that DreamWorks had been developing at their former studio home and desperately need to get cameras rolling for their venture. This week, Spielberg began directing the big-budget motion-capture 3-D movie "The Adventures of Tintin: Secret of the Unicorn," starring Jamie Bell and Daniel Craig, for Paramount and Sony Pictures.
A DreamWorks spokesman said, "This is a vote of confidence in the new company, so we're feeling pretty good about it."
-- Claudia Eller
Photos: Spielberg (Hector Mata / AFP/Getty Images) and Snider (Vince Bucci / Getty Images)
Three movie studios -- Viacom Inc.'s Paramount Pictures, Lionsgate and Metro-Goldwyn-Mayer -- said today that they were saddling up for a fourth-quarter ride of their planned new movie channel. They also said their proposed channel's moniker is Epix.
It's pronounced "EH-pix," not "EE-pix" a la EBay or Eharmony. Epix is a play on the word "epic" that much of Hollywood aspires to. Insert lion's roar here.
The venture came together about 10 months ago as the studios' lucrative and longtime pay-TV deals with CBS Corp.'s Showtime Networks were winding down. After months of testy negotiations, the two sides failed to come up with a new distribution pact.
That's partly because the three amigo studios knew they were sitting on a treasure trove of films, including "Indiana Jones" and the "The Curious Case of Benjamin Button." In April, they decreed that they didn't need no stinkin' Showtime and could launch a "next-generation" move channel of their own.
But the venture needs to rustle up some distribution partners. That part of their mission has been slow going, which conjures up less memorable lines from Warner Bros.' 1948 classic "The Treasure of the Sierra Madre."
"Hey, if there was gold in them mountains, how long would it have been there? Millions and millions of years, wouldn't it? What's our hurry? A couple of days, more or less, ain't gonna make a difference."
-- Meg James
UPDATE: So much for unity. SAG president Alan Rosenberg has just offered a reminder of how that won't happy anytime soon. In his own message to members, Rosenberg blasted the board's decision to fire executive director Doug Allen on Monday. A staunch backer of Allen's, Rosenberg accused the board of using an "undemocratic provision" in the SAG's constitution to oust Allen and not giving him a chance to "face his accusers ... Many of us believe that Doug Allen was fired simply because he was too good, too strong, and too much a unionist," Rosenberg said.
David White, interim executive director of Screen Actor Guild, wasted no time calling on members to end the sparring that has hobbled the union.
SAG's board fired former executive director Doug Allen on Monday and replaced him with White, a former general counsel to the union. In his first communication, White said in an e-mail message to members that his top priority was to unify the guild.
"As we confront these efforts together, my overarching goal is this: to help restore your confidence that this is a union where strong and wise decisions are made despite political differences," White wrote. "It is time to turn the page on the most destructive aspects of the guild's internal politics."
Whether Allen's supporters, including SAG President Alan Rosenberg, are ready to make peace with the new top administrator remains to be seen. Many of Allen's backers in the "Membership First" camp are deeply upset over his ouster and suspicious of White.
But White has the backing of moderates who now control the board, as does John McGuire, who has been charged with reopening contract talks with the studios that have stalled for months. McGuire has already had informal discussions with studio representatives to lay the groundwork for negotiations that could begin by early next week, people familiar with the matter said. SAG members have been without a contract since June 30.
-- Richard Verrier
There's now executive parity at Universal Pictures. As part of a four-year contract extension, the studio's movie bosses, Marc Shmuger and David Linde, will now share the chairman title.
Neither adds new responsibilities in his executive roles. But the announcement, which accompanied a "town hall" meeting of employees on the Universal lot this morning, signals a vote of confidence and management stability for the NBC Universal-owned movie studio. Shmuger's and Linde's contract renewal comes on the heels of company-wide cutbacks at the entertainment giant, which like other businesses is grappling with the economic downturn.
In March 2006, when they were paired to succeed studio chief Stacey Snider (who left to join DreamWorks), Shmuger was crowned chairman and Linde co-chairman. Over the last three years, the two have helped steady Universal after it was rattled by the departure of the highly-regarded Snider.
When they took over, Shmuger and Linde made it priority to keep the studio's key production companies, Imagine Entertainment and Working Title, in the fold by clinching new multi-year deals with each.
According to Universal, the two have overseen the "two most profitable years" in the studio's history when it logged a worldwide box office record in 2007 thanks to such hits as the action picture "The Bourne Ultimatum" and comedy "Knocked Up." The studio then surpassed that milestone last year with global ticket sales of $2.8 billion, fueled by releases "Mamma Mia!" and "The Incredible Hulk."
And, like all studio chiefs, they've had to endure their share of box office misses such as "The Kingdom," "Flash of Genius" and the costly comedy sequel "Evan Almighty."
-- Claudia Eller
Photo: David Linde , left, and Marc Shmuger. Credit: Alex Berliner / Berliner Studios/BEI Images
Lionsgate distribution and marketing vet Tom Ortenberg has left the independent studio after more than 12 years and is joining the Weinstein Co. in the newly created post of president of theatrical films. He will oversee distribution, marketing, publicity and acquisitions domestically for TWC and its genre label, Dimension Films.
Ortenberg, who begins his new job Monday and will remain based in Los Angeles, will have his work cut out for him at TWC, which has struggled to produce hits since its formation by Bob and Harvey Weinstein following the brothers' acrimonious corporate divorce from Walt Disney Co.
TWC, which previously had a distribution deal with MGM, is now releasing its own films. Ortenberg said he is looking forward to working for the demanding Weinsteins, whom he's known for the last decade since Lionsgate and the Weinsteins' former movie company, Miramax Films, collaborated on such releases as "Fahrenheit 9/11," "Sicko" and "Dogma."
Ortenberg says he's joining TWC at an "opportune time," when the company is poised to release what he believes is a promising slate of movies that includes director Quentin Tarantino's World War II drama "Inglourious Basterds," starring Brad Pitt and Mike Myers; the horror sequel "Halloween 2"; Rob Marshall's screen adaptation of the Broadway musical "Nine," featuring Daniel Day Lewis, Penelope Cruz, Nicole Kidman and Kate Hudson; and "Youth In Revolt," a coming-of-age story starring Michael Cera (who played the boyfriend in "Juno").
TWC this weekend is expanding its Oscar-nominated film "The Reader" onto more than 1,000 screens.
Ortenberg, who was the first executive to work in Lionsgate's Santa Monica office when it opened in 1996, had a contract with the studio that ran until this spring. After Lionsgate acquired "Juno" financier Mandate Pictures in September 2007 and brought in founder Joe Drake as co-COO and president of the motion picture group, many in Hollywood felt it was only a matter of time before Ortenberg would be gone. Ortenberg says his years at Lionsgate have been "wonderful" and that "it was time for a new challenge."
Drake credited Ortenberg with being a "huge asset" in helping build the company and the parting of ways was "amicable." As Ortenberg's deal was expiring, Drake says, "ultimately, we both decided it was best to go our separate ways." Ortenberg is not expected to be replaced, with his duties to be picked up by Lionsgate's two co-presidents of marketing, Sarah Greenberg and Tim Palen, and distribution head Steve Rothenberg.
-- Claudia Eller
Photo of Tom Ortenberg by Genaro Molina / Los Angeles Times
The Screen Actors Guild board today moved to oust the union's executive director, Doug Allen, citing a crisis in leadership that has paralyzed Hollywood's largest actors union.
A majority of directors said in a statement that they had delivered a "written assent" document to SAG headquarters that authorized that Allen be immediately replaced as national executive director by former SAG General Counsel David White, who will serve as interim executive director. Allen has been on the job for two years.
For now, Allen's job will be split in two. As part of the shake-up, John T. McGuire will take over Allen's role as the union's chief negotiator on all contracts. In addition, the union's negotiating committee will be replaced by a "task force" appointed by the board, which will "work to secure a TV/theatrical contract that can be sent to members with a positive recommendation."
"These much needed changes will allow SAG to chart a new course," the group said.
The move, which was widely expected, comes two weeks after the board majority attempted to fire Allen but was filibustered by his supporters during a 28-hour meeting. The group represents a coalition of so-called moderates who have accused Allen and SAG President Alan Rosenberg of mishandling negotiations and dividing the 120,000-member union. Actors have been working without a contract since June 30, 2008.
The board members voted by means of "written assent," a provision in SAG's constitution that allows a majority of directors to take action by putting their votes in writing. "The unrelenting obstruction by a minority of board members has left us no alternative,'' the group said in explaining its action.
SAG had no immediate comment.
-- Richard Verrier
Photo: Ken Hively / Los Angeles Times
General Electric Co. released its fourth-quarter earnings Friday, and the news was grim from NBC's local TV stations, historically one of the most reliable generators of cash flow for NBC Universal.
Revenue from the stations tumbled 25% compared with the fourth quarter of 2007, and operating profit dropped a staggering 55%. GE's overall income plunged 44% to $3.72 billion as the conglomerate's industrial and finance businesses were hit hard by the recession.
All local media outlets, including newspapers, TV and radio stations, have fallen on hard times in the last year as their best advertisers -- including car dealerships and retailers -- have struggled to maintain customers and sales.
The financial picture wasn't as bleak for all of NBC Universal. For the period that ended Dec. 31, the media company generated $4.43 billion in revenue, down 3% from the fourth quarter of 2007. Operating profit came in at $865 million, down 6%.
Saving grace: cable television.
The company benefited by strong results from its cable channels including MSNBC, which saw its revenue up 37% for the election-driven quarter. Overall, revenue from the cable channels, including USA Network and Bravo, was up 11% and profit soared 22% for the quarter.
"We had continued strong performance in cable, but that was more than offset by the pressure that we are seeing in local markets," GE Chief Financial Officer Keith Sherin told analysts in a conference call.
It was a mixed bag for Universal Pictures and the theme parks. Operating profit was down 7% for the division, partly because of higher marketing costs resulting from the release of more films in the period than the year-earlier quarter. Attendance was up 4% for Universal Studios in Los Angeles but down 4% in Orlando. One bright spot: DVD sales were up 20%, buoyed by the blithe musical "Mamma Mia!"
But Wall Street wasn't in a singing mood.
GE's shares plunged 10.7% after the call, in which executives reiterated how the "terrible credit markets" were hurting their businesses. GE stock closed at $12.03 a share. The industrial and financial giant delivered earnings of $3.65 billion, or 35 cents a share, down from $6.7 billion, or 66 cents a share, a year earlier. Overall revenue slid 5% to $46.2 billion.
-- Meg James
Photo: NBC offices in Burbank. Credit: David McNew / Getty Images
Embattled SAG Executive Director Doug Allen got a boost from his supporters in Hollywood.
Allen's supporters issued a statement today saying a majority of Hollywood Division board members strongly backed their leader, who has been on the job for two years.
"He is a true unionist and the strongest and most dedicated National Executive Director/Chief Negotiator the Screen Actors Guild has seen in decades,'' said the statement, which was signed by 34 actors, including Justine Bateman and Scott Bakula.
They also took direct aim at Allen's detractors, who've accused him of mishandling contract negotiations with the studios. "They've pursued a campaign to confuse and frighten the general membership," the actors said of Allen's critics. The actors also said they support Allen's proposal to suspend the union's strike authorization vote and allow members to vote directly on the studio's final contract offer.
Although the board majority urged Allen to call off the strike vote, originally set for Jan. 2, they oppose having members vote on the offer as is. Instead, they argued, the union should first seek to negotiate better terms.
It's not clear what effect the show of support will have on Allen's fate. Moderates, who command a majority of votes on the national board and will ultimately have final say on whether he keeps his job, are continuing to seek his ouster.
— Richard Verrier
In the who-would-have-thought-it category, France has bestowed its highest honor on none other than Jay Roth, executive director of the Directors Guild of America.
The French Consulate in Los Angeles announced this morning that French President Nicolas Sarkozy has named Roth a "Chevalier de L'Ordre National de la Legion d'Honneur," otherwise know as the French Legion of Honor. Hollywood luminaries who have received the honor in the past include Steven Spielberg, Clint Eastwood and, of course, Jerry Lewis.
Roth, although not a filmmaker, was recognized for his role in helping to create and promote the Franco American Cultural Fund, which was created 13 years ago to foster professional and cultural exchange between French and American filmmakers. Among other things, the fund is responsible for the annual City of Lights, City of Angels French Film Festival, held in April at the DGA Theatres in Los Angeles.
Established by Napoleon Bonaparte in 1802, the decoration honors distinguished civil or military achievements. Roth said he was honored to be recognized. "France and the United States share a rich and wonderful cinematic history, and to be recognized for my role in strengthening the ties between our two film communities is truly special," he said in a statement.
Also recognized was producer Mike Medavoy, co-founder of Orion Pictures and former chairman of TriStar Pictures. The onetime talent agent has had a long association with French film icons, including Jeanne Moreau and Francois Truffaut, and French talent, such as Dido Renoir and Juliette Binoche.
-- Richard Verrier
A lawsuit brought by Mexico media giant Grupo Televisa against Univision Communications Inc. has been settled, averting a potentially costly outcome that could have hobbled the dominant Spanish-language broadcaster in the U.S.
The settlement came shortly before Grupo Televisa Chairman Emilio Azcarraga Jean was to take the stand in a Los Angeles federal courtroom in an effort to sever his company’s ties with Univision by cutting off the pipeline of Televisa’s popular soap operas, called telenovelas, that drive Univision’s huge ratings.
Televisa sued Univision nearly four years ago for breach of contract, contending that Univision had cheated it out of royalties. Azcarraga Jean had planned to ask a jury to allow his company to terminate its 25-year commitment to provide programs to Univision.
-- Meg James
Two high-profile class-action lawsuits alleging that networks and production companies denied overtime payments to story producers and others have been settled for more than $4 milllion.
The lawsuits, which were filed in 2005 with the backing of the Writers Guild of America, West, alleged that TV production companies and networks violated California wage and hour laws by, among other things, denying overtime pay and meal breaks to more than 20 workers on such as reality shows as "The Bachelor" and "Trading Spouses."
Under the settlements, which have been preliminarily approved by a Los Angeles Superior Court judge, Fox Broadcasting and Rocket Science Laboratories agreed to pay $2.6 million to settle the claims, while ABC, CBS and various other defendants agreed to pay $1.545 milion.
About 400 workers are eligible to file claims for payment, said Emma Leheny, lead counsel for the workers.
"This is a paycheck that is long overdue for employees who worked tirelessly on reality shows -- many of which are hugely successful -- only to be shut out of basic protections like overtime pay."
A spokesman for the Writers Guild of America, West, which helped workers file the lawsuits and publicized their plight as part of a campaign to organize writers in the reality genre, declined to comment, citing the conditions of settlements.
Attorney Jeffrey Richardson, who represented the production companies and networks, could not be reached for comment.
-- Richard Verrier
Photos: ABC Television ""The Bachelor") | Fox Broadcasting ("Trading Spouses")
The board majority of the Screen Actors Guild today stepped up its efforts to oust the union's executive director, making its case directly to members.
In an e-mail statement to SAG members, the board's dominant coalition said it no longer had confidence in the leadership of Doug Allen, citing his "failed strategy" for securing a new contract for actors. SAG members have been without a contract for almost seven months.
The statement further accused Allen and SAG President Alan Rosenberg of thwarting the will of the board majority last week, when it was blocked from voting on a resolution to fire Allen and replace the union's negotiating committee.
"We firmly believe that SAG needs a change of course and a new captain,'' the board directors said. "Mr. Allen has held fast to a failed strategy for over half a year, even as members have lost nearly $50 million from working under an expired contract.... With a new direction, we can turn this around and put the Screen Actors Guild back on the right track."
The statement came in a response to a letter Allen wrote last week in which he proposed postponing a strike authorization vote. Instead, he proposed asking members to vote on whether they would accept the studios' final offer without a recommendation from the board.
But the recommendation was roundly dismissed by dissident directors as disingenuous, given that SAG had already spent more than $100,000 discrediting the studios' offer as unacceptable.
Allen has strongly pushed for the strike vote, saying it would give him leverage in negotiations. But his aggressive pursuit of the referendum sparked a backlash among members who felt the tactic was ill-timed, given the hardships facing members amid a deep recession.
If Allen doesn't resign, his hand may be forced. Moderate directors are working on a plan to oust Allen through "written assent," which allows board members to take action by casting their votes in writing. Such a vote could happen later this week.
A SAG spokeswoman said neither Allen nor the guild would comment. In letter to members sent over the weekend, Allen acknowledged that the board is now "deeply and publicly split" and vowed to press ahead with the strike authorization vote if the board does not accept his "compromise."
The suggestion did not sit well with board member Todd Hissong, president of SAG's Chicago branch.
"Yet again you have the audacity to make ultimatums to your employers," Hissong wrote. "I hereby demand your immediate resignation as our National Executive Director."
-- Richard Verrier
Some call it a Hail Mary pass.
Beleaguered Screen Actors Guild Executive Director Doug Allen, who barely survived an effort to oust him from his job at a marathon board meeting this week, is now attempting to make nice with his critics on the board in an apparent last-ditch effort to keep his job.
But the overtures aren't working with his opponents on the board, who have the votes to get him fired and are still actively working toward that goal.
In a letter to board members Wednesday, the former Buffalo Bills linebacker proposed suspending a planned strike authorization vote by members, as a number of union members had demanded. He also suggested that the union's 120,000 members vote on the studios' final offer -- without a recommendation from the board.
That's a startling turnaround for a union leader who had spent months belittling the studios' final offer as threatening the very future of middle-class actors, and who had argued forcefully that a strike authorization vote was needed to give him a big stick in negotiations with the studios.
Allen further urged the board members to end their bickering. "Super-heated rhetoric through the press will not contribute to our success on behalf of the members," he wrote. "Working together to resolve your differences will."
But his letter was roundly panned by the moderate board members, who failed to fire Allen during an around-the-clock board meeting Monday and Tuesday after his supporters filibustered a vote on his future.
"After spending $100,000 propagandizing that this is a horrible deal, how can he now claim that this be sent out" without a recommendation from the board, said Richard Masur, a New York board member and former SAG president. "It's an astonishing piece of cynical manipulation."
Ned Vaughn, a spokesman for the Unite for Strength group of moderates, said: "His turnaround on the strike authorization is notable, but the majority of the board wouldn't have stayed up through 28 hours of relentless stalling if it had confidence in Doug Allen's leadership."
Indeed, far from seeking conciliation with Allen, Vaughn and other moderates on the board have hardened in their resolve to oust him and to disband the union's negotiating committee.
Short of demanding another emergency board meeting, the dissident directors could also invoke a so-called written assent provision in the union's constitution. That would allow the board to take action on a matter without actually meeting, so long as a majority of members indicate their votes in writing.
People close to the situation said that Allen's fate could be determined as early as next week.
Allen was not available for comment.
SAG President Alan Rosenberg said he welcomed Allen's suggestion and blasted his detractors. "For them to object to Doug's proposal is pathetic and laughable," he said. "They want to get rid of Doug because he's too strong and too much of a unionist."
-- Richard Verrier
Steven Spielberg has informed Paramount Pictures that he and partner Reliance Big Entertainment of India will receive a big check tomorrow for 17 DreamWorks projects they need to jump-start their new independent studio, which is still in need of securing more than $1 billion in funding to become fully operational.
Paramount had set a Jan. 15 deadline for the payment. Tomorrow's check is expected to total about $27 million, according to people familiar with the arrangement. Spielberg and Reliance will eventually have to pay an additional $6 million both to Paramount to cover overhead for producers and to screenwriters for additional drafts of their projects.
Paramount Vice Chairman Rob Moore said today that his studio had just received a letter from Spielberg's attorney guaranteeing payment for the projects, which include "39 Clues," "Chicago 7," "Motorcade" and "Dinner With Schmucks," a comedy to star Steve Carell and to be directed by Jay Roach.
In the corporate divorce with Paramount, Spielberg negotiated the right to buy the DreamWorks projects in development that Paramount owned and retains the right to co-finance. There is a second group of DreamWorks projects that remain at Paramount in which Spielberg can be a producer but not an investor.
Spielberg's efforts to raise a hoped-for $1.25 billion to fund his new studio with Reliance continue to be hampered by the global credit crisis. Reliance has committed to providing Spielberg and his DreamWorks chief, Stacey Snider, up to $550 million in equity for a half ownership stake in the studio, but not until the executives can secure at least that much in debt financing to meet their plan to make six movies a year. Lead bank JPMorgan Chase is looking to raise $325 million of $700 million to $750 million in total debt by the end of the first quarter.
Since leaving Paramount, Spielberg and Reliance have been supporting the overhead at the new company, which has 60 employees and a distribution deal in the wings with Universal Pictures
A DreamWorks spokesman confirmed that the check was being sent. "Making this investment clearly shows confidence that the deal is moving forward," he said.
-- Claudia Eller
Photos: Spielberg (Hector Mata / AFP/Getty Images) and Snider (Vince Bucci / Getty Images)
As if Los Angeles doesn't have enough grim economic news, here's one more sobering fact to add to the pain: Feature film production on the streets of the city dropped to its lowest level on record last year, according to FilmL.A., the group that coordinates on-location film shoots.
Total days for on-location shoots of feature films fell 14% in 2008, the lowest level since tracking began in 1993, according to FilmL.A., which coordinates film permits in the city and much of the county. Feature production in the fourth quarter fell 46%, posting its weakest quarter since 1993.
Part of the falloff was due to the one-time effects of the writers strike and concern about a walkout by actors. Studios rushed to finish productions before June 30th, when the actors' contract expired.
But FilmL.A. attributed the falloff primarily to the effects of so-called runaway production. The group noted that feature film production has been down 10 of the last 12 years, as filmmakers have flocked to other countries and, increasingly, other U.S. states such as Michigan, New York and New Mexico that offer tax incentives and rebates that aren't available in California.
"We should stop talking about runaway production. It's ran-away production,'' FilmL.A. President Paul Audley said in a statement. "California is not competitive in the marketplace. We must create an environment that brings back high-dollar film productions, the thousands of jobs they generate and the revenues they pump into our local economy."
Shoots for commercials also decreased, falling 17% in the fourth quarter and 11% for the year, as major advertisers scaled back their spending amid a deteriorating economy.
Television, however, continued to be the one bright spot for LA. Overall, TV production gained 8% for the year, primarily due to a continued surge in reality TV that helped offset big declines in sitcoms and pilots that were severely affected by last year's writers strike.
-- Richard Verrier
Photo: Karen Tapia-Andersen / Los Angeles Times
Moderates on the Screen Actors Guild board moved closer Monday night toward ousting Doug Allen, the union’s controversial executive director and chief negotiator who has been on the job for just two years.
Rebuking the union's leadership, a group of board members from New York, Hollywood and the union’s regional branches introduced a resolution calling for Allen to be fired. The board members contend that the former Buffalo Bills linebacker has mishandled negotiations and fostered deep divisions inside the union. Actors have been without a contract for six months. The resolution also called for disbanding the union’s negotiating committee and replacing it with a new group that would seek to restart talks with the studios.
Although moderates hold a slight majority on the 71-member board, they were unable to put the measure to a vote because of parliamentary maneuvers orchestrated by Allen’s backers. The moves appeared to be aimed at forestalling any action against Allen -- closely aligned with SAG President Alan Rosenberg -- and allowing a planned strike authorization vote to proceed.
Nonetheless, a vote determining Allen’s fate could come late tonight or tomorrow morning, when the board meeting is scheduled to resume in Los Angeles. If Allen is fired, the planned strike referendum that was originally scheduled to begin Jan. 2 would probably be scrapped.
-- Richard Verrier
Expect there to be plenty of blood on the floor at tomorrow's meeting of the national board of the Screen Actors Guild.
As previously reported in the Times, SAG board members at loggerheads with the union's leadership have been mobilizing to oust the guild's negotiators, including Doug Allen, who serves as SAG's chief negotiator and executive director.
That effort has gathered considerable steam in the last week as dissident board members in New York, Hollywood and the union's various regional branches have reached consensus that drastic action is needed to break the deadlock in contract negotiations with the studios. SAG members have been without a film and TV contract for six months.
Sources close to the situation say moderates within the 120,000-member union, who hold a slight majority on the 71-member board, are expected to introduce a resolution tomorrow to fire Allen. Critics say the former official with the NFL Players Assn. has bungled the negotiations with the studios and has weakened SAG's leverage by feuding with the smaller actors union, the American Federation of Television and Radio Artists.
Allen, who has a year remaining on his contract, isn't expected to go quietly. He has plenty of supporters in Hollywood, including SAG President Alan Rosenberg, who have praised him as a tough negotiator.
In any event, ousting Allen won't be cheap. The union likely would have to buy out the remainder of his $500,000-a-year contract, as it did when the board fired Allen's predecessor, Greg Hessinger, more than three years ago.
-- Richard Verrier
It's no secret that Warner Bros. is poised to slash dozens if not hundreds of jobs at its Burbank headquarters in the first quarter. The Time Warner Inc. studio will join a train of other entertainment companies including NBC/Universal and Viacom Inc. to cut costs across their operations in the face of tough industry economics and the deepening recession.
Although the number and timing of layoffs at Warner is still being determined, it will definitely impact scores of "back office" workers in management information systems, finance and accounting. Many of those jobs will be outsourced to India and Poland, according to people familiar with the situation. Once Warner finalizes its plans, it will conduct training sessions with the outsource workers at its Burbank lot as well as at its various offices around the world.
Those who work in other divisions at the studio will also be affected, but at this point, it is unclear to what extent.
All department heads at Warner have been asked to come up with a specific plan to reduce costs in their respective divisions, which will include cutting travel and entertainment expenses, trimming marketing budgets and eliminating jobs. In 2005, Warner went through a similar top-to-bottom cost-cutting exercise to help shore up its bottom line in the face of declining DVD sales, flat movie ticket revenues and a less robust TV syndication market. That belt-tightening resulted in about 400 job losses -- more than 5% of the studio's workforce -- around the world, including about 300 in Burbank. Warner Bros. employs around 8,000 worldwide.
Warner spokeswoman Sue Fleishman declined to offer any details about the current situations, saying "no decisions have been made."
-- Claudia Eller
Photo: Warner Bros. in Burbank by Kevork Djansezian/AP
The most spirited squabbling in the legal fight over "Watchmen’s" distribution rights had been limited to lawyers for 20th Century Fox and Warner Bros. But now one of the film’s producers has joined the fray, urging Fox to drop its case and let the film come out as planned.
In a letter first published on the entertainment news web site HitFix on Thursday, "Watchmen" producer Lloyd Levin said Fox repeatedly passed on making the movie, and is now trying to take advantage of Warners’ willingness to develop and produce director Zack Snyder’s epic superhero movie.
"Shouldn’t Warner Brothers be entitled to the spoils—if any—of the risk they took in supporting and making ‘Watchmen’?" Levin wrote. "Should Fox have any claim on something they could have had but chose to neither support nor show any interest in?"
Fox sued Warners in February, claiming the studio and "Watchmen" producer Larry Gordon never obtained the necessary movie rights from Fox. U.S. District Judge Gary Feess ruled in Fox’s favor on Dec. 24, saying that Fox, not Warners, owns a copyright interest in "Watchmen." Fox, the judge said, controls at the very least the film’s distribution rights.
Warners was set to release the $130-million film on March 6, but Feess will convene a mini-trial in the coming weeks to decide who gets to release the movie. Fox did not immediately respond to a request for comment on Levin’s letter. Levin did not return a telephone message.
Levin, an established producer with credits on "United 93," "Hellboy" and "Boogie Nights" among many others, recounts in his letter the film’s long and often troubled path to the screen. He says that Fox dismissed the film’s basic screenplay with an expletive.
"Conversely, Warner Brothers called us after having read the script and said they were interested in the movie—yes, they were unsure of the screenplay, and had many questions, but wanted to set a meeting to discuss the project, which they promptly did. Did anyone at Fox ask to meet on the movie? No. Did anyone at Fox express any interest in the movie? No. Express even the slightest interest in the movie? Or the graphic novel? No," Levin writes.
The producer concludes by calling Fox’s conduct "beyond cynical," saying, "…if Fox had any say in the matter, Watchmen simply wouldn't exist today, and there would be no film for Fox to lay claim on."
-- John Horn
Brad Grey, whose purported demise at Paramount Pictures has been the subject of on-and-off speculation in Hollywood for at least two years, has just signed on for five more years as chairman and chief executive of the Melrose Avenue studio. His boss at parent company Viacom Inc., Philippe Dauman, extended Grey's contract to early 2014, although it wasn't set to expire until March of 2010.
The development, first reported today on Nikki Finke's Deadline Hollywood Daily, is a vote of confidence in Grey, a former talent agent who took over Paramount in March 2005. Since then he has built up the struggling studio, including bolstering its international business, wooing big-ticket talent like Brad Pitt and writer-producer-director J.J. Abrams, and landing distribution partnerships with such key suppliers as DreamWorks Animation and "Iron Man" producer Marvel Studios.
At the same time, Grey's box office and management track record has been mixed.
He's credited with helping to launch the "Transformers" franchise (in partnership with DreamWorks) and jump-starting a languishing fourth "Indiana Jones" movie with George Lucas, Steven Spielberg and Harrison Ford. Under Grey's watch, Paramount has risen from No. 6 in domestic box office share at 9.4% in 2005 to No. 2 at 16.4% in 2008, according to Box Office Mojo, thanks to such hits as "Iron Man," "Indiana Jones and the Kingdom of the Crystal Skull" and DreamWorks Animation's "Kung Fu Panda." Then again, the studio has had its share of misses under Grey, including the costly films "The Love Guru," "Zodiac" and "Stardust."
There also been a healthy dose of internal turmoil and controversy.
Though Grey was lauded for engineering Viacom's 2006 purchase of DreamWorks, he also was ultimately criticized for alienating founders Steven Spielberg and David Geffen and executive Stacey Snider. Not long after the acquisition, the DreamWorks principals were furious with Grey for grabbing credit for their movies that helped turn around Paramount.
Of course, Spielberg and Snider have since left Paramount and are now setting up a new studio with a distribution deal in place with rival Universal Pictures. And Geffen has sailed off into the sunset. The loss of DreamWorks triggered speculation that Grey's job was again on the line.
Grey acknowledges that his nearly four-year run has been bumpy.
"It's been a complicated couple of years," he said. "It's been a process and a challenging one. But I enjoy the job and I am proud of what we've done. I'm very bullish about our team and the movies we have this year," which include the current release "The Curious Case of Benjamin Button" and the upcoming summer releases "Transformers 2," "G.I. Joe" and a new "Star Trek."
The Paramount chief said that when Viacom honcho Sumner Redstone initially hired him, Grey told the media mogul it would take five years to turn the company around. "We're well ahead of schedule."
-- Claudia Eller
Photo: Wally Skalij / Los Angeles Times
In a surprise move, Lionsgate Entertainment Corp. has agreed to acquire TV Guide Network and TVGuide.com for $255 million, torpedoing a deal announced just over two weeks ago with media entrepreneur Allen Shapiro.
TV Guide Network owner Macrovision Solutions Corp. said in a statement that it had terminiated its previous agreement with an investor group led by Shapiro and backed by JPMorgan Chase. That deal, which was supposed to close in April, was dependent upon various performance contingencies.
Lionsgate, the film and TV studio that produces the “Saw” movies and the TV series “Mad Men” and “Weeds,” said it would fund the transaction from “existing cash and available funds.” Unlike the Shapiro deal, Lionsgate’s pact is not subject to financial performance requirements.
It is not immediately clear what Lionsgate’s plans are for the network, which is available in 83 million homes. But studio Chief Executive Jon Feltheimer described it as “prime real estate, rarely available, that fits extremely well with our strategy of combining content creation, distribution and direct access to the consumer."
-- Claudia Eller
Adding to the drama that has engulfed contract talks between actors and Hollywood studios, moderates on the Screen Actors Guild board are expected to push for the ouster of the union’s negotiators.
The move, which is designed to break the six-month-long deadlock, could undermine the guild’s current leadership, which some fear is bringing Hollywood to the brink of another strike.
SAG has been shaken internally by rival membership groups that take opposing views on what course of action the 120,000-member union -– the largest in Hollywood -– should take in efforts to reach a new contract with the studios. But despite those sharp differences, the strategy has largely been set by the union’s hard-line leadership, which includes guild President Alan Rosenberg and Executive Director Doug Allen, the chief negotiator.
Now a coalition of the union’s board members, frustrated at the stalemate with the studios that has left SAG in limbo, is expected to call for disbanding the union’s negotiating committee at an upcoming meeting.
It also plans to vote against holding a strike referendum, and instead replace the current negotiating team with a “task force” appointed by the board, people close to the situation said. The people asked not to be identified because they were not authorized to discuss the plans.
The negotiating committee is dominated by the Membership First faction that has backed Rosenberg and Allen, whose future as the union’s chief negotiator also could be on the table at the Jan. 12 meeting, the people said.
The new negotiating team would be constituted to reflect the results of an election last fall, when a group of moderate actors known as Unite for Strength won key seats on the board, forming a slight majority with supporters in New York and elsewhere.
If approved, the new negotiators would seek to jump-start talks with the studios, probably by consenting to new media pay terms negotiated by other unions in exchange for improvements in traditional media pay areas.
Such a move, however, would be a major blow to SAG leaders, who’ve argued that a strike authorization from members is needed to give them leverage with studios in what they view as landmark negotiations that could determine how actors are paid in the digital era.
But the proposed referendum has faced mounting opposition within the union, including from New York board members who this month called on the union to scrap the vote, arguing that it was ill-timed in light of the sour economy. The recommendation won a significant boost from more than 130 high profile actors, including Tom Hanks, George Clooney and Sally Field. Other actors, including Martin Sheen, Ed Asner and Mel Gibson, are openly supporting the authorization, splintering Hollywood’s largest union.
“Obviously, the board has to consider withdrawing the strike authorization given what’s happening, and we may need to shake things up to get what we need,” said Ned Vaughn, spokesman for the Unite for Strength group who serves as an alternate member of the national board.
Added Paul Christie, a board member and former president of SAG’s New York division, “We feel this is a negotiating committee that has... gotten us nowhere.”
Actors have been without a contract since June 30. The question is how willing studios will be to sweeten the current offer on the table, which studios have repeatedly insisted is their final one, even though it contains some provisions that are widely unpopular, such as a proposal to eliminate mandatory mealtimes.
Negotiating committee member Anne-Marie Johnson said it would be “undemocratic” to prohibit members from voting on a strike authorization because the studios’ final offer was unacceptable.
Johnson vigorously defended Allen, whom critics accuse of mishandling the negotiations as well as alienating the smaller sister actors union, the American Federation of Television and Radio Artists. “To want to fire your lead negotiator whose only fault is that he’s trying to get the best possible contract he can get, baffles the mind,” Johnson said.
Allen could not be reached for comment.
Allen said in an e-mail to members last week that he and Rosenberg postponed plans for the strike referendum, which was scheduled to begin Friday, to “address the unfortunate division and restore consensus.” However, he said, the vote would proceed immediately after the Jan. 12 meeting.
Rosenberg was not available for comment. In a recent holiday message to members, he called on them to put aside their differences. “We must stay true to our solidarity votes in the boardroom and true to our responsibility to better the lives of all SAG members and their families. Make no mistake, a house divided is doomed to fall.”
-- Richard Verrier
"Spongebob Squarepants," "Dora the Explorer" and Jon Stewart soon might be pulled off Time Warner Cable systems in Los Angeles and around the country if the cable operator and Viacom Inc. cannot reach a new contract before midnight tomorrow. The move could knock Viacom's cable channels, which include Nickelodeon, MTV, VH1 and Comedy Central off nearly 2 million households in Los Angeles.
"We've been attempting to negotiate in good faith but they seem to taken it to the brink. Unfortunately, we are now at an impasse," said Philippe Dauman, chief executive of Viacom Inc. "It's unfortunate for all of our viewers should they lose the ability to watch our programming."
Viacom's license agreement with Time Warner Cable, which serves 12.3 million homes in the U.S., is set to expire at midnight Wednesday. If no deal is reached, Time Warner must take the Viacom channels off its cable systems and use alternative programming instead.
"Advertising revenue stinks so they are looking to stick our customers for the difference," said Alex Dudley, Time Warner Cable spokesman. "They are holding our customers hostage for a bunch of networks with sagging ratings and only one or two good channels. We have to hold the line for our customers."
Viacom said that it is asking for an increase of about 25 cents per month for the package of channels, which comes to about $3 a year per customer. Time Warner said that could trigger cable networks to demand higher fees as well, which ultimately could add as much $30 a year to a subscribers' bill.
This wouldn't be the first time that a cable channel has gone dark. It is not unusual for cable networks and cable system operators to pull or block programming during difficult negotiations. In 2004, for example, Viacom's cable channels disappeared from EchoStar's Dish Network for two days while both sides quarelled over the terms of a new contract. Earlier, Time Warner blocked ABC from its cable systems in New York during a breakdown in contract negotiations with parent company Disney involving carriage of its cable networks such as the Disney Channel and Toon Disney.
But the high-stakes dispute could prove to be different this time around because much of Viacom's programming, including Comedy Central's John Stewart and Steven Colbert, is now available free online. Moreover, Viacom no longer owns CBS, so it can't threaten to pull the network off cable systems on the eve of NFL playoffs, as leverage in negotiations. The hard-nosed tactics also come at a time when Viacom's stock is trading at historic lows and the company's controlling shareholder, Sumner Redstone, is facing hard choices in refinacing the debt of his holding company, National Amusements Inc.
-- Meg James
Photos: Left: Philippe Dauman, chief executive, Viacom Inc. (Chip Somodevilla/Getty Images); Right: Glenn Britt, chief executive, Time Warner Cable (Seth Wenig/AP)
Shaken by growing internal dissent that is splintering Hollywood's largest union, the Screen Actors Guild has postponed plans for a controversial strike authorization vote until after the union's national board meets to discuss the matter.
The union's 120,000 members were poised to vote on the planned strike referendum next month, with ballots going out Jan. 2 and tabulated by Jan. 23.
But in an e-mail to board members Monday night, SAG Executive Director Doug Allen said he and SAG President Alan Rosenberg agreed to push back the strike referendum until after the board convened a special meeting Jan. 12 to "address the unfortunate division and restore consensus."
"This division does not help our effort to get an agreement from the [studios] that our members will ratify,'' Allen wrote. "This will provide us with more time to conduct member education and outreach on the referendum before the balloting."
The move doesn't mean Hollywood will avoid its second strike in a year, after the 100-day walkout by writers that ended in February. But it does suggest the union's leadership is facing mounting pressure from within the ranks to reconsider its options amid a historic recession that would make a strike authorization difficult. A work stoppage must be approved by 75% of members who vote.
SAG members also have expressed growing concerns that a strike would weaken the union while strengthening the smaller actors union, the American Federation of Television and Radio Artists, which has already signed a deal with the studios and picked up a number of television pilots.
The union's leadership has argued that a strike authorization vote is necessary to give them leverage in stalled contract negotiations with the studios. The actors have been without a contract since June 30.
SAG's negotiating committee announced plans to seek a strike vote last month, after efforts by a federal mediator to jump-start negotiations failed.
But the decision has touched off a firestorm in the guild, pitting actor against actor and creating a level of discord that is unusual even by SAG's standards. Tempers flared last weeek, when SAG's New York division members openly rebuked Rosenberg and demanded he call off the strike vote. Rosenberg initially spurned the idea, saying that would undermine the union and only benefit the studios.
Celebrities have lined up on either side of the fracas. More than 130 high-profile actors, including Tom Hanks, Robert Redford and George Clooney, have also urged the union to reconsider its decision. But celebrities including Mel Gibson, Rob Schneider and former SAG President Ed Asner have sided with the leadership, arguing that the studios' contract offer is unacceptable and threatens the future of actors in the digital era.
Allen's e-mail was sent out after he and Rosenberg met earlier in the day with actors Ned Vaughn and "Chicago Hope" star Adam Arkin, representatives of Unite for Strength, a coalition of actors with moderate views that recently won key seats on the national board.
In a statement, the actors said they expressed their concerns about the "growing rift" over the strike authorization referendum. "We feel it’s imperative that the National Board have a chance to reconsider whether the referendum should proceed, given what’s been happening. We appreciate that they’ve taken our concerns seriously."
Just what the board may do at the Jan. 12 meeting is uncertain. While Allen said in the e-mail that the strike vote would begin immediately after the meeting, that's by no means clear.
In fact, moderates, who hold a slim majority on the board, are expected to press for a delay in the strike vote to see if negotiations with the studios can resume. The board could vote to replace the current negotiating committee with a task force, as New York division board members have advocated, or even move to have Allen step aside as chief negotiator.
Call it the protest that wasn't.
For months, Hollywood's below-the-line workers have been stewing about the prospect of another industry walkout. Crew members were hit hard during the 100-day writers strike, which shut down most film and TV production. Then came the fallout from a so-called de facto strike caused by uncertainty in contract talks between the studios and the Screen Actors Guild. Studios rushed to wrap their 2009 movies by June 30, before the actors contract expired, causing a steep falloff in production for the remainder of the year.
So it was no surprise that some location scouts, grips, electricians and others opted to protest a "town hall" meeting in Hollywood on Wednesday night held by the Screen Actors Guild. The workers, carrying signs saying "Please No Strike Now-The Crew," contended that an actors walkout would be devastating to below-the-line crew members, coming in the teeth of a historic recession.
Even so, the gathering drew only about a dozen protesters, barely a trickle given the roughly 30,000 crew members who work in the Los Angeles region.
Blame the foul weather and Hollywood union politics.
The rally was not endorsed by either of the two major unions representing Hollywood's blue-collar workers. Teamsters Local 399, which strongly supported the writers during their walkout, prides itself on showing solidarity with other unions. And the International Alliance of Theatrical Stage Employees, which has been critical of SAG leadership in the past, has been uncharacteristically quiet this time. The IA is facing its own internal challenges, including persuading its members to support a recently negotiated contract that includes unpopular cuts in health insurance benefits.
Tom Lackey, one of the protesters, acknowledged that last-minute planning might have caused the low turnout Wednesday night but said the picketers made their point. "We respect their right to strike; we just think it's a bad time,'' said Lackey, a veteran location scout who has worked on such movies as "Twilight" and "Anger Management." "The economy is in horrible shape. Everybody is losing their houses. We feel that if they strike now, there would be too much blood left on the table."
That argument has been made by many within SAG, including during a raucous meeting in New York on Monday night, in which many members accused SAG leaders of mishandling negotiations. SAG President Alan Rosenberg faced a much warmer crowd Wednesday, when about 600 SAG members crowded into a ballroom at the Renaissance Hollywood Hotel.
Among them was Robert Schneider, who drew a standing ovation during a speech in which he suggested Tom Hanks and George Clooney didn't understand the studios' final contract offer. Representatives of Clooney and Hanks declined to comment. The "A-Listers," as they're called, were among more than 130 high-profile actors this week who signed a letter opposing the strike authorization vote, expected to begin Jan. 2.
But "Titanic" actress Frances Fisher, a member of the guild's negotiating committee, says there are no plans to scrap the referendum. "If we get a good deal,'' she said," that's going to help our brothers and sisters in the other unions."
-- Richard Verrier
Everyone in Hollywood knows that one of the world’s wealthiest filmmakers, Steven Spielberg, hates to spend his own money making movies.
But, Spielberg and India’s Reliance Big Entertainment — his equity partner-in-waiting — are expected to write a hefty check to Paramount Pictures next month to buy 17 projects they need to jump-start their new independent studio.
Facing a due date of Jan. 15, Spielberg and Reliance will have to pay DreamWorks former owner between about $25 million to $35 million for the projects, depending upon commitments to screenwriters.
In their recent divorce settlement with Paramount, Spielberg and his top associate Stacey Snider negotiated the right to buy the DreamWorks projects, which Paramount owns and has an option to co-finance. A second group of DreamWorks projects remain at Paramount in which Spielberg can be a producer, but not an owner.
Spielberg and Snider are eager to get their hands on 17 priority projects that include “Dinner for Schmucks,” a $75 million-budget comedy to star Steve Carell and to be directed by Jay Roach. DreamWorks hopes to make the picture next fall providing it can line up a financing partner. Also earmarked to be made are “Motorcade,” an action thriller about terrorists assaulting the President’s motorcade in Los Angeles; “Hereafter,” a thriller in the vein of “The Sixth Sense”; and “Chicago 7,” a drama about the protesters at the 1968 Democratic Convention in Chicago.
More pressingly, Spielberg and Snider are anxious to secure a $1.25 billion war chest needed to fund their planned studio, which has a distribution deal set with Universal Pictures. But, as reported, the financing efforts have been hampered by the global credit crisis.
Reliance has said it would provide up to $550 million in equity for half ownership of the studio, but not until Spielberg and Snider first obtain that amount or more in debt financing to meet their business plan to produce six movies a year. Lead bank JPMorgan Chase hopes to raise $325 million of $750 million in total debt by the end of the first quarter.
Variety raised an interesting point today questioning whether, in retrospect, Spielberg and Snider would have stayed at Paramount if they knew the economy would collapse. However, the likelihood of that would have been zero-to-none if you ask anyone who knows the pair, who desparately wanted to be free agents.
Since leaving Paramount, Reliance and Spielberg have been bankrolling overhead at the new company, which employs 60 people and is based at the director’s longtime offices on Universal’s lot. The partners have each contributed $12 million to keep operations going, said a person who was not authorized to publicly discuss the studio’s financial issues.
Snider said that despite the poor state of the economy and the impact it’s having on the studio’s ambitious plans, she is confident that the financing will come together next year.
“It’s an unprecedented time in the market,” said Snider. “Every day there’s a new headline and a new obstacle, but all of our advisors have known about this and are navigating through it.”
-- Claudia Eller
Walt Disney Co.'s main film financing partner Kingdom Films LLC is suing the Burbank studio for allegedly breaching a 2005 contract guaranteeing it a share of profits from the recent hit "High School Musical 3: Senior Year" and next year's release "Hannah Montana: The Movie."
In the suit, filed in Delaware Chancery Court, Kingdom contends that Disney sought to deprive Kingdom of "bargained-for rights" in the two movies, excluding those pictures from the slate of 32 films that it had agreed to help finance. In 2005, Disney and Kingdom formed Magic Films as a vehicle to finance the slate. Disney owns 60% of Magic; Kingdom owns 40%.
Kingdom claims that in exchange for its commitment to provide $135 million in equity financing and a revolving credit line of up to $370 million, it was to "receive certain rights" to movies in the slate and the "attendant benefits" of their success.
"The clear understanding was that, except for certain films and categories of films that specifically were carved out, Magic Films would benefit from the value of Disney's properties." Kingdom contends that the exclusion of the two films "is part of a concerted effort to eliminate from the slate those films that defendants believe may be profitable as a result of their association with the Disney Channel."
Indeed, "High School Musical 3," the first theatrical release of the movie series that originated on the Disney Channel, stands out as one of the few home-run hits for Disney this year. The movie has generated $234.5 million in worldwide ticket sales since opening in theaters Oct. 24. "Hannah Montana," also based on a Disney Channel show, is due out in theaters on April 10.
Kingdom disputes Disney's claim that "HSM3" is not eligible for inclusion in the slate because it is a sequel to the "High School Musical" and "High School Musical 2" television movies that aired on the Disney Channel and were not released in theaters. Under terms of the deal between the studio and Kingdom, sequels are excluded from the fund.
Disney declined to comment beyond a brief statement: "We believe we have acted in accordance with the terms of the contract and that this suit has no merit."
It is not unusual for studios with co-financing slate deals to hold out films that they prefer to finance fully themselves in order to reap all the profits. For example, Disney carves out its "Pirates of the Caribbean" movies; Warner Bros. its "Harry Potter" franchise and Sony Pictures its "Spider-Man" series from the financial partners who help fund their pictures.
Being sued by your principal source of film financing isn't exactly good news for the "happiest" place on Earth (or any other studio for that matter) at a time when third-party financing is increasingly difficult to obtain. Just ask Viacom Inc.'s Paramount Pictures, which earlier this year saw a potential $450-million film financing pact with Deutsche Bank go up in smoke because the terms were too onerous for the studio.
The last thing studios want when profit margins are under pressure amid flat movie attendance and shrinking DVD sales is to assume 100% of the risk in financing their movies. After all, the favored Hollywood way is to rely heavily on OPM --other peoples' money. But if you upset the other people, then you risk losing their money.
-- Claudia Eller
Yari Film Group, the producer behind such films as “Crash” and “The Illusionist,” said four creditors had forced its releasing division into Chapter 11 reorganization.
"A legal procedure prompted by the actions of four creditors with disputed debts was successful in forcing YFG into involuntary bankruptcy," the company said in a statement late Friday afternoon.
The company, headed by Hollywood financier Bob Yari, said in a statement that the action left the company "with no other option but to commence substantial layoffs and to suspend its releasing activities." It is unclear how many people will be let go at Yari’s Westwood-based company.
Yari said the company's production operations are "distinct entities with separate financing which remain unaffected by the legal proceedings."
YFG said it planned to “continue without interruption” its plans to produce two movies in the first quarter of next year, “Killing Pablo,” starring Javier Bardem as narcotics kingpin Pablo Escobar, and “The Governess,” a romantic comedy with Jennifer Lopez.
The company also has at least two unreleased movies in the can, “The Maiden Heist,” a comedy starring Morgan Freeman and Christopher Walken, and “The Assassination of a High School President,” a comedy with Bruce Willis. Those films will presumably have to find new distributors.
YFG said it was moving forward with limited release of two other films for awards qualification, “What Doesn’t Kill You,” which debuted today in New York and Los Angeles, and “Nothing but the Truth,” which stars Kate Beckinsale as a journalist who is imprisoned for not giving up a news source. It will open next week.
“Our goal is to aggressively work towards reorganizing our debt so that we can become a stronger company,” Yari said in a statement.
-- Claudia Eller
Photo: Bob Yari. Credit: Frederick M. Brown / Getty Images
The campaign to oppose a strike authorization by members of the Screen Actors Guild got a boost today when members of the the New York Division Board of Directors issued a statement calling for their union to halt the upcoming referendum.
The New York board, which has 14 representatives on SAG's 71-member national board who have often clashed with the guild's leadership, demanded that the national board hold an emergency meeting to appoint a new negotiating task force to replace the current negotiating committee in order to jump- start contract talks with the studios that have stalled for months.
In October, the New York board members supported plans for a strike authorization if mediation failed. But they contend SAG leaders gave short shrift to mediation and that the worsening economy has now made that course of action unwise.
In its statement, the New York board said: "Negotiations failed. Then something else failed, too. The American economy. With that collapse, everything has changed. Our members and our industry are struggling through the worst economic crisis in memory. While issuing a strike authorization may have been a sensible strategy in October, we believe it is irresponsible to do so now."
Regional branches around the country, which often align with their counterparts in New York, were expected to issue similar statements opposing the strike authorization vote, guild insiders said.
The opposition underscores how deeply divided SAG is, making it tougher for union leaders to present a united front as they wage an "education campaign" to muster support for the strike authorization. Ballots will be sent out Jan. 2 and tabulated on Jan. 23, the day before the national board is scheduled to meet. A strike authorization requires 75% approval from voting members, with the board having ultimate say over whether a walkout would occur.
UPDATE: SAG President Alan Rosenberg said in a statement he was "shocked and troubled" by the New York Board's demand to cancel the strike authorization vote, noting the New York board previously supported the idea in October. But he agreed to their demand to schedule an emegency national board meeting, the purpose of which would be to discuss "the ramifications of this extraordinarily destructive and subversive action."
-- Richard Verrier
ReelzChannel, the cable and Web network launched two years ago to feed the seemingly insatiable appetite of movie aficionados, has canceled its flagship show, "Dailies," and laid off more than 40 people in its Los Angeles studios this week in another sign of the troubling times in media.
The Minnesota operation, owned by Hubbard Media, still employs about 125 people in Los Angeles, where the company is nearly three years into a five-year lease for space at the sprawling Los Angeles Center Studios just west of the 110 Freeway in downtown.
Reelz has been hurt by the company's business plan. Unlike a lot of cable channels, Reelz made a strategic decision to depend solely on advertising, and not cable TV subscriber fees, for revenues. The strategy was adopted to encourage cable operators to carry the channel. But the economic downturn is severely crimping advertising spending, leading to an economic crunch at the channel.
Gary Thorne, ReelzChannel's president and chief operating officer, said that instead of producing the half-hour program, "Dailies," the network would provide its entertainment news in shorter segments throughout the day. He said the company remained "fully engaged" in its cable channel and online operation.
"We took this occasion to look at everything that we are doing to find efficiencies and make some adjustments," Thorne said. "We don't have a crystal ball, but as we look going into 2009, it doesn't look too good."
-- Meg James
It's official: Strike referendum ballots will be mailed out Jan. 2 with the results tabulated on Jan. 23, the Screen Actors Guild said this morning.
Guild insiders said the union had originally planned to send out ballots immediately after Christmas. But the timing of the mailing came under heavy fire from union critics who believed SAG wanted to minimize the turnout of working actors, who are the most likely to oppose the strike authorization.
Addressing the timing issue in a statement, SAG President Alan Rosenberg said: "We want SAG members to have time to focus on this critical referendum, so we have decided to mail ballots the day after New Year's ... A yes vote sends a strong message that we are serious about fending off rollbacks and getting what is fair for actors."
The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, was swift to dismiss the announcement. "SAG members are going to be asked to bail out a failed negotiating strategy by going on strike during one of the worst economic crises in history. We hope that working actors will study our contract offer carefully and come to the conclusion that no strike can solve the problems that have been created by SAG's own failed negotiation strategy."
SAG wants additional time to conduct an aggressive education campaign to garner support for its goal of seeking a better contract than what the studios have offered, a tall order given the deep recession and divisions in the union.
The campaign kicked into high gear on Monday when nearly 500 SAG members attended a rousing town hall meeting in Hollywood, where supporters cheered guild leaders and booed a few dissidents who questioned the wisdom of holding a strike referendum during a severe economic downturn.
A positive strike vote requires 75% approval from those who vote and gives the union's board authority to call a strike if all efforts at reaching a contract with the studios fail. Ballots will be tabulated at Integrity Voting Systems in Everett, Wash. The national board, which meets on Jan. 24, will have final say on whether to stage a walkout.
-- Richard Verrier
There is a saying in politics that whoever controls the turnout wins the election. That's as true in presidential elections as it is in Hollywood labor politics.
A key vote later this month by members of the Screen Actors Guild could push the entertainment industry toward another bitter strike nearly a year after screenwriters ended a 100-day walkout. The union's negotiators say they need the strike authorization vote to give them leverage in contract talks with the studios that have stalled for months.
The question is, why would SAG hold such an important vote over the December holidays, when much of Hollywood shuts down? Some union critics think the timing is suspicious and claim that SAG leaders would like nothing more than to see a low turnout, particularly among working actors who are the most likely to oppose a walkout.
But people close to the union's negotiating committee say the voting delay is necessary to give the guild enough time to conduct its "educational campaign" in order to build support for its cause at a time when the union remains sharply divided over the best course of action.
That's in marked contrast to the Writers Guild of America, which was firmly united when members overwhelmingly approved a strike authorization last year.
SAG, on the other hand, has been beset by feuds between moderates and hardliners over negotiating strategy, contract demands and strained relations with its sister actors union, the American Federation of Television and Radio Artists. (AFTRA quickly reached a new contract with the studios and is poised to expand its jurisdiction into prime time TV shows typically covered under SAG contracts.) The 44,000 members who belong to both unions could play a key role in the strike referendum, given that most of them already endorsed the AFTRA contract, which is virtually identical to the one the studios are offering SAG.
While some prominent actors, including Rob Morrow and former SAG President Ed Asner, have declared their support behind the union leadership, other household names have openly challenged holding a strike authorization during the worst recession in decades.
"We do not believe in all good conscience now is the time to be putting people out of work," wrote wife-and-husband actors Rhea Perlman and Danny DeVito in a recent letter to SAG directors that was widely circulated.
The sparring has extended into SAG's 71-member board as well. New York board member and former SAG President Richard Masur has blasted guild leaders for their handling of the failed federal mediation talks, which precipitated the strike authorization vote. SAG President Alan Rosenberg returned fire at critics, saying negotiators did everything they could to keep talks alive in the face of studio intransigence.
Meanwhile, studio executives aren't appearing fretful about the prospect of a strike -- as they were last year when the writers were ramping up to walk out -- because they're betting that SAG members will not vote for strike authorization given the recession, with its attendent widespread layoffs that is now washing over media companies.
Still, the Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, isn't taking anything for granted. The group has launched its own campaign targeting SAG members. The alliance took the unusual step this week of posting its final contract offer on its website and issued missives that attempt to portray SAG leaders as out of touch with economic reality.
While the economy will almost certainly be a factor in the vote, it's not clear how much of an effect it will have because of the divergent makeup of SAG's membership.
Working actors -- those who rely on work in film and TV for their primary source of income -- account for about 10% of the guild's membership. Instead, 90% of SAG's members earn less than $28,000 a year from acting work and -- putting aside the multiplier effect for a moment -- have less at stake if TV and film production shuts down in Hollywood.
Moreover, the faction that dominates the Screen Actors Guild, Membership First, has proven in the past that it can effectively mobilize support among extras and actors who only work occasionally.
"It's a unique feature of this particular union that there is a very large chunk of underemployed and unemployed and I think that could work in the union's favor," said David Smith, a labor economist at Pepperdine University. "Still, I think getting the strike authorization will be a tall order given the economic crisis. That will be on many actors' minds."
So, short of SAG and the studios reaching an 11th-hour bargain, strike authorization ballots will be mailed out to about 100,000 eligible SAG members (those who are paid-up on dues) at the end of the month. Balloting takes three weeks. A thumbs-up to strike requires approval from 3 out of 4 members who return ballots.
Still, even if the members vote to strike, the final decision on whether or not to walk out is ultimately left to the guild's 71-member board. Moderates who hold a slim majority on the board aren't expected to support a strike unless there is an overwhelming mandate from members. That makes the size of the "yes" vote critical.
But, paradoxically, a small turnout could actually work to the advantage of SAG's leaders. By simple math, the fewer members who vote, the easier it is for the guild to meet or exceed the 75% threshold. SAG referendums typically draw a turnout of 25% to 30% -- and a recent survey conducted by the union drew 10%. Of them, nearly 90% supported seeking a better deal than what the studios proposed in their "final offer."
Given the high stakes involved, and heavy campaigning on both sides, turnout should be considerably higher this time around. But holding the referendum over the year-end holidays could mean a smaller turnout by working actors, who often get their mail sent to business managers, whose offices will be closed.
But sources close to the guild's negotiating committee say the delay is necessary to give the guild time to make its case to members and build support through a series of town hall meetings, mailings, e-mails from SAG leaders and videos on the union's website. SAG also has invited publicists and agents to attend a meeting at the union's headquarters on Wednesday.
Said one board member: "We only have one stab at getting this right and we didn't want to rush anything."
-- Richard Verrier
(Photo: Danny DeVito and Rhea Perlman courtesy Peter Kramer / AP)
After a disastrous start to the new television season, NBC Entertainment today pushed out three of its top programming deputies -- Katherine Pope, Teri Weinberg and Craig Plestis -- amid a major retrenchment of the troubled third-placed network.
NBC Entertainment co-Chairman Ben Silverman is negotiating a new contract with NBC and might be given additional responsibilities, according to one person close to the situation.
Former NBC studio chief Angela Bromstad -- a close ally of NBC Universal Chief Executive Jeff Zucker -- will be brought back from London to oversee programming in a major restructuring, according to three NBC executives who declined to be identified because of the sensitivity of the situation. The company is expected to collapse its two separate programming entities -- the network and the program production studio -- into one unit.
NBC is also expected to hire Paul Telegdy, a British Broadcasting Co. executive, to be in charge of alternative programming, taking the place of Plestis. He will remain at the company.
The shakeup was first reported by the website www.deadlinehollywooddaily.com
Pope had been in charge of Universal Media Studios, the company's television production studios, until Friday. The outspoken executive had clashed with Zucker and Silverman. Pope has long advocated keeping the television studio separate so that it can attract top writers and producers, and sell to outside networks.
Weinberg came to NBC Entertainment, along with her boss, co-chairman of NBC Entertainment Ben Silverman, in June 2007. But sources said that Weinberg alienated some of her underlings and never fit into the NBC corporate culture. She is expected to stay at the network in a "transitionary" role until her contract expires in June and then become a television producer.
-- Meg James
(Photo: Ben Silverman courtesy NBC Universal, Inc.)
French company Vivendi plans to keep its 20% stake in NBC Universal — at least for another year.
Vivendi's decision, announced today, eases a potential headache for General Electric Co., which owns 80% of NBC Universal. If Vivendi had exercised its option, GE would have had the right to buy the stake before it was offered to the public.
For GE, the timing would not have been ideal. The industrial giant has stumbled this year, squeezed by the mortgage meltdown, tight credit markets and a weakening economy. Nearly 40% of GE's revenue comes from its financial services division. GE's stock has tumbled more than 50%.
Four years ago, GE acquired Vivendi's profitable entertainment assets, which included the Universal Studios theme parks, Universal Pictures and cable channels USA Network and Sci Fi, in a merger that strengthened NBC's portfolio and diversified its revenue. At the time, Vivendi received $3.4 billion in cash and the 20% stake.
The deal contained a complicated provision for Vivendi to unwind its holdings at "fair market" value. Each year, Vivendi has until early December to notify GE of plans to dispose of its stake.
"It's not the right time to sell," Vivendi spokeswoman Flavie Lemarchand-Wood said, citing market conditions. Investors are sour on the shares of media companies, which are trading at historically low multiples, because most generate the bulk of their revenue from advertising.
Besides, Lemarchand-Wood said, Vivendi is not in need of cash and has available credit lines of nearly $7 billion. "And we are very happy with NBCU's management team," she said.
NBC Universal declined to comment. In 2007, NBC Universal revenue totaled $15.4 billion and operating income of $3.1 billion.
— Meg James
In a sign of rising tensions within the Screen Actors Guild, the group representing a moderate faction of actors within the union is urging its supporters to think long and hard before casting their support for a strike authorization vote.
SAG leaders, citing the need for leverage in negotiations with Hollywood studios, recently said they would seek strike authorization from the union's 120,000 members. Talks have been logjammed for months. The movie and TV industry is bracing for the possibility of a second strike in a year -- this time by Hollywood's largest union -- which would have far-reaching economic consequences.
In an e-mail sent to about 2,000 supporters of Unite for Strength, the group that recently won key seats on SAG's 71-member national board, organizers Amy Aquino and Arye Gross questioned whether the union was moving too hastily toward a showdown with the studios.
"In these historically difficult economic times, every reasonable possibility for making a deal must be explored before considering a job action, and based on the media reports we've seen, we're concerned this hasn't happened," the actors wrote. Aquino is a former board member of SAG and supporter of former SAG President Melissa Gilbert, who clashed with the current faction that dominates SAG.
SAG President Alan Rosenberg said the e-mail was ill-considered. "When the federal mediator declared that the mediation had adjourned, there was very little else to say,'' Rosenberg said. "We made every effort imaginable to reach a deal with the [studios] and they were as immovable as they have been since the beginning of negotiations."
Unite for Strength flexed its newfound clout in October by pushing for the failed mediation talks, which many predicted were doomed from the start because the sides were so far apart over how actors would be compensated in the digital era.
Tuesday's e-mail, however, stopped short of specifically recommending how SAG members should vote, reflecting the tightrope the new board members are walking between supporting their union in a time of negotiations and living up to the expectations of those who elected them.
Nonetheless, the letter was interpreted by many supporters as a signal to oppose the authorization vote. SAG is expected to send out strike referendum ballots by mid-December, with the voting lasting three to four weeks. If the strike authorization is approved by 75% of members who vote, SAG could stage a walkout in early January, potentially disrupting Hollywood's awards season and schedules for filming movies.
The national board, however, will have ultimate say over whether a strike would occur. Backed by high-profile actors including Tom Hanks and Sally Field, Unite for Strength won five seats on the national board, giving moderates in the guild a slight majority over the incumbent group known as Membership First, which has strongly backed the current leadership. Unite for Strength candidates criticized the guild's handling of contract negotiations, in particular its unsuccessful efforts to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists.
-- Richard Verrier
With the collapse of mediation talks between the major studios and the Screen Actors Guild, the warring parties wasted little time launching campaigns aimed at discrediting each other while courting the sympathies of actors who will cast ballots in a strike referendum next month.
In a letter sent to the union's 120,000 members today, SAG President Alan Rosenberg blasted the major studios for seeking to impose "one-size-fits-all demands" on the union and accused management of using the depressed economy as an excuse to rebuff the needs of actors, especially when it comes to securing their future in the burgeoning world of online entertainment.
"It's also curious that these global corporations are preaching to us about the bad economy,'' Rosenberg said. "Like it's our fault. As middle-income actors we are the victims of corporate greed. We didn't cause this turmoil. Now, more than ever, we need to make a unified stand, in solidarity. … Our ability to make a living as professional actors for decades to come is at stake."
The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, issued a swift rebuttal: "SAG's latest mass e-mail fails on three counts: It fails to explain why SAG deserves more than everyone else in the industry. It fails to justify why SAG members should bail out a failed negotiating strategy by striking during a time of historic economic crisis. And it fails to explain why it makes sense to strike when SAG members will lose more during the first few days of the strike than they could ever expect to gain."
The mass e-mails kicked off an informational campaign that the guild's negotiating committee overwhelmingly approved Saturday after a federal mediator declared the talks were over. The guild is expected to spend more than $100,000 on a campaign to muster support for the strike referendum, communicating through e-mails, mailouts, newsletters, town hall meetings and residual checks.
SAG launched a similar and unsuccessful campaign to defeat a contract negotiated by the smaller actors union, the American Federation of Television and Radio Artists, which has since secured a number of pilots for TV shows as producers look for a hedge against a possible strike by SAG. The 44,000 members who belong to both unions could be pivotal in determining the outcome of the strike vote.
The AMPTP has mounted its own campaign, aimed at portraying SAG's leaders as out of touch with economic reality and seeking better deals than five other unions that have signed agreements with the studios. They will get their message across through various advertisements and possible direct mailings to SAG members, sources close to the studios said.
Amid the conflicting claims, the ailing economy is certain to play a central role in the referendum, in which SAG members will be asked to give the union's board authority to call a strike "as a last resort."
Although Rosenberg did not specify when ballots would be sent, guild insiders said tit probably would be by mid-December. It would take 30 more days for ballots to be counted, meaning that the earliest SAG could strike would be in early January. The timing appears aimed at disrupting the Golden Globes and Academy Awards shows early next year. The board has final say over whether a walkout would occur.
In order to pass, a strike authorization requires approval of 75% of members who vote. Ordinarily, that would be a given. Union members typically approve such votes overwhelmingly as a show of solidarity to their union leadership and in the belief that the threat of strike can yield gains at the bargaining table. What's more, the vast majority of SAG's members do not earn their living through acting, so they have less to lose in the event of a shutdown in film and TV production.
On the other hand, those members who rely on other jobs to supplement their incomes also are more vulnerable to the broader economic downturn and could be less inclined to support a walkout.
— Richard Verrier
The Writers Guild of America, West has settled its ugly spat with comedian Tyler Perry, sources close to the matter say.
The guild filed an unfair labor practice complaint last month with the National Labor Relations Board, alleging that mini-mogul Perry had unlawfully fired four writers on the TBS cable sitcom "House of Payne" for trying to secure a union contract. Perry's attorney said at the time that the writers were sacked for "the quality of their work."
But sources say Vic Bulluck, head of the Hollywood chapter of the NAACP, has helped to broker a peace between the show-business entrepreneur and the writers union. Under the terms of the pact, Perry's production company agreed to sign a contract with the guild for "House of Payne" as well as another upcoming comedy series. The company will also pay an undisclosed sum to the fired writers, said the sources, who asked not be identified because the settlement was confidential.
The union had been trying for months previously to negotiate a contract covering writers on "House of Payne." But those efforts broke down, according to the guild, when the director/producer/playwright/actor fired the writers after warning them that they could be replaced if they continued to angle for a guild contract. Things got so ugly in October that at one point the guild staged a protest outside Perry's new studio facility in Atlanta -- intended to draw attention as much as to embarrass the staunch supporter of President-elect Barack Obama.
The guild declined to comment on the matter. Perry could not reached.
-- Richard Verrier and Greg Braxton
Photo of Tyler Perry by Kevin Winter/Getty Images
MySpace named MTV executive Courtney Holt as president of MySpace Music, concluding a months-long search for a candidate to run the social network's joint venture with the world's largest music companies.
Holt, whose appointment has been the subject of online speculation for weeks, has had a career that bridges music and technology. As executive vice president of digital music for MTV Networks, he oversaw digital initiatives for MTV, VH1 and CMT channels. Before joining MTV, he was senior vice president of new media for Interscope Geffen A&M.
"He was the first person that we really found that had the music experience, both from a marketing perspective and from a music programming perspective, the technical knowledge, and the relationships with all the major labels as well as independent labels," said MySpace co-founder Chris DeWolfe, who said 40 candidates were interviewed for the job. "He’s the only one out there that had all those variables that we could check off."
DeWolfe said he first met Holt in 2005, when he worked for Interscope. Holt was the first label executive to use MySpace's social network as a launch pad for new singles and albums from such major acts as Black Eyed Peas, Weezer and Audioslave, he said.
"In each case, each of those bands sold more albums than they’d ever sold before," DeWolfe said. " He was a visionary."
Despite a career working for a major label and MTV, DeWolfe said Holt brings an appreciation for the independent artists who have long used MySpace as a launch pad. Holt owns The Echo, which DeWolfe characterized as one of the largest venues for independent artists on the West Coast.
Inside image-conscious L.A., Courtney even scored fashion points.
"If you look at Courtney, from the clothes that he wears to the glasses that he may wear, he’s got a very eclectic style to him," DeWolfe said. "A very unique style."
--Dawn C. Chmielewski
Photo credit: Nicole Bengiveno
The Screen Actors Guild said early this morning that it would seek a strike authorization vote from members after last-ditch efforts by a federal mediator to end a months-long stalemate in contract negotiations with the major studios sputtered.
"Management continues to insist on terms we cannot possibly accept on behalf of our members," the union said in a statement. "We remain committed to avoiding a strike but now more than ever we cannot allow our employers to experiment with our careers."
SAG, which represents 120,000 actors, said it would now begin a "full-scale education campaign" in support of a strike referendum, in which members would be asked to authorize a strike should their negotiators fail to reach a deal with the studios.
SAG members have been without a contact since June 30 and are sharply at odds with the studios over how actors are to be paid for work distributed over the Internet.
The guild's announcement came shortly after the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major Hollywood studios, disclosed that the "parties were unable to reach an agreement" and that the mediator had "adjourned the process" after two days of meetings.
The outcome was not unexpected. Few pinned much hope that federal mediator Juan Carlos Gonzalez would be able to bridge the enormous gap between the parties. Gonzalez also was unable to mediate a contract dispute last year between writers and the studios.
What's more, the union's 71-member national board previously gave the guild's negotiating committee authority to seek a strike vote in the event that mediation efforts failed. Ultimately, the board will have final say on whether to call an actual walkout, which would shut down most major film and TV production. It's unclear whether newly elected moderates on the national board would seek to block such a drastic action.
Actors previously struck in 2000 in a six-month walkout over a commercials contract. If SAG strikes this time, it probably wouldn't be until early next year. A strike referendum takes several weeks and would probably not occur until after the guild conducts an aggressive campaign to muster support. SAG leaders are expected to time any walkout to disrupt the upcoming Academy Awards and Golden Globe award shows early next year and studio plans to ramp up production on movies set for release in 2010.
It is not uncommon for unions to seek such votes as a way to gain leverage in contract negotiations on the theory that employers would be more inclined to take their demands seriously when confronted with the threat of walkout.
But securing such a vote in the current climate could be difficult for SAG. The referendum would require 75% approval from members who vote in order to pass. Although union members typically grant strike authorizations to leaders in negotiations, that could be a difficult threshold to meet given the deteriorating economy and strike fatigue after a 100-day walkout earlier this year by the Writers Guild of America.
During meetings Thursday and Friday, Gonzalez expressed frustration that neither side appeared to back down from its positions. Among the chief sticking points is SAG's insistence that it should have jurisdiction over all shows created for the Internet, regardless of budget. The studios said that would limit their ability to experiment in new media and instead proposed limiting contracts only to shows above certain budgets levels or when professional actors are hired. They argued that SAG should accept the same new-media pay framework already negotiated by five other unions, including the smaller sister union the American Federation of Television and Radio Artists and the WGA.
The studios have repeatedly touted how actors were losing out on contract gains negotiated by the other unions. But that argument came under fire this week when the WGA accused the studios of reneging on some of the key terms of its contract negotiated in February -- a point that was seized on by SAG in its statement.
The AMPTP had no immediate response.
-- Richard Verrier
If Ben Silverman is getting ready to leave the peacock flock, neither he nor NBC is acting like it. In fact, the signals suggest he's not about to fly the coop.
On Thursday NBC parent company General Electric Co. added Silverman to the board of the Peacock Equity Fund, a $250-million media investment vehicle owned by NBC Universal and GE Commercial Finance. Earlier in the week, Silverman sat across the table from interviewer-of-the-moguls Charlie Rose to wax about the future of digital entertainment, television and advertising.
And then there was a curious item on the New York Post's Page Six last week that all but left bus tire treads on Katherine Pope, who runs NBC's in-house TV studio that produced the network's failed series "My Own Worst Enemy." The item, which many in Hollywood speculated was spin to take the heat off Silverman, blamed Pope for NBC's struggles in prime time.
Silverman has been engaged in negotiations for a new contract that would extend his tenure as co-chairman of NBC Entertainment and Universal Media Studios beyond June, when his current contract expires. One person close to the situation says a deal could be reached by the end of the year.
Almost from the start, some have questioned Silverman's commitment to NBC.
For example, the free-spirited TV producer back in June 2007 would sign only a two-year deal, figuring that would be sufficient for him to turbo-charge NBC's lackluster prime-time lineup. Then the ambitious entrepreneur could move on to bigger things.
But six months after Silverman took the gig, the network TV business, already in decline, tumbled off a cliff.
Script writers went on strike, shutting down production of shows. TV executives scrambled to plug their schedules with mediocre replacement programs. Once the strike was settled in February, they had to prepare a fall season without the benefit of the traditional program development process.
Then the season got off to a shaky start. The major networks are now posting record low ratings. Most new fall shows, including Silverman's pet projects, the Christian Slater drama "My Own Worst Enemy," the adventure series "Crusoe" and the Brooke Shields power-woman drama "Lipstick Jungle," have sputtered or choked.
If all of that wasn't depressing enough, the faltering economy has prompted advertisers to scale back their purchase of commercial time. Media executives are bracing for an ugly first quarter.
All of this makes it a lousy time to be running a major network -- making some wonder why Silverman needs the headache. He doesn't need an NBC paycheck, since earlier this year he sold his production company, Reveille, to Elisabeth Murdoch for more than $125 million.
But NBC would like to keep Silverman, according to people close to him. His bosses think he's been a good steward. Profit has increased this year, in part because Silverman wooed advertisers to plug their products in NBC shows such as "Knight Rider." He has also been instrumental in lowering the network's programming costs through co-productions (of course, all networks have had lower programming costs this year because of the strike).
Two months ago, NBC Universal Chief Executive Jeff Zucker appeared to be teeing up expectations that Silverman would stay put.
"I could not be more pleased with the job that he's done," Zucker said of Silverman in an interview with The Times. "He's done everything that we've asked of him."
Photo: NBC Universal
The Screen Actors Guild has added one more gripe to its list of beefs with the major Hollywood studios.
Having picked apart the studios' proposals on home video pay, force majeure claims, Web clips and jurisdiction for online programs, SAG is now highlighting concerns about payments for old TV series streamed on the Web.
The union has extended a "special invitation" to guild members who worked on shows such as "Maverick," "Bewitched" and "The Brady Bunch" -- that is, those who are still alive -- to attend a meeting Tuesday night at the guild's headquarters in the Mid-Wilshire district. The agenda: to discuss a studio proposal that would pay no residuals for streaming most television programs that were made before 1974.
That's the year studios agreed to pay residuals for future TV shows in perpetuity, replacing a system by which residual payments were capped based on the number of times a show was rerun and when it was created.
The studios contend that they've already settled the question of residual payments for pre-1974 shows and shouldn't have to take on additional obligations. But SAG maintains that actors are entitled to share in any revenue if some of the old chestnuts find new life on the Web.
That's just one among many issues that will no doubt surface Thursday when a federal mediator convenes a meeting -- the first in four months -- between SAG and the Alliance of Motion Picture and Television Producers. And it's one more sign of just how far apart the sides are in their contract negotiations.
-- Richard Verrier
The firepower of the new James Bond release "Quantum of Solace" -- which blasted to the top of the box-office charts this weekend with a $67.5-million U.S. debut and has already racked up $250 million in overseas ticket sales -- must come as bittersweet news for Sony PIctures. Sure the studio, which co-financed the $180-million-budget picture with MGM, will share in the film's riches as it makes its way through theaters, DVD, television and other media outlets. But, just as the countless beauties whom 007 left in the lurch over the last four decades, Sony too will soon find itself out in the cold after "Quantum" fades to black.
As part of its equity investment in MGM in 2005, when it led a $4.9-billion buyout of the legendary studio with a consortium of investors, Sony inherited the right to co-finance and distribute MGM's Bond movies. Sony made a killing on the first of those releases, "Casino Royale," which grossed nearly $600 million worldwide at the box office alone. Because Sony put up 75% of the film's $150-million budget, it received an even bigger cut of the profit than MGM. A person familiar with the matter said the film made $150 million-plus, of which Sony walked off with more than $100 million.
But, by the time "Casino Royale" was released in 2006, the partnership between Sony and MGM had imploded. MGM's board voted unanimously to dump Sony as the domestic distributor of its DVDs after the studio failed to meet certain performance targets. With that move, Sony was also forced to forfeit its claim to the coveted Bond franchise. In its separation agreement, Sony negotiated to participate in one final Bond movie, "Quantum of Solace."
When Sony first became involved in "Casino Royale," the studio's movie chief Amy Pascal spent a lot of time cultivating Bond's longtime London-based producers and creative gatekeepers, Michael Wilson and Barbara Brocoli. Pascal worked closely with the producers on reinventing the four decades-old franchise with a more updated feel and edgier leading man. The suave, polished British secret agent portrayed by such actors as Sean Connery, Roger Moore and others, not only gave way to the screen's first Blond Bond, but a much grittier, three-dimensional character played by Daniel Craig.
So, what will Sony do without Bond in the house? No worries. The Culver City studio has several other macho franchise films in the works including such superhero vehicles as "The Green Hornet," to star Seth Rogen and directed by Stephen Chow (who will also play the crime fighting hero's sidekick Kato) and "Flash Gordon," to be directed by Breck Eisner (yes, that's Michael's son). Also in the works is an adaptation of the graphic novel "The Preacher," to be directed by Sam Mendes. And, let's not forget Sony's plans to make two more "Spider-Man" films and a sequel to "Hancock," starring Will Smith. The studio is also aiming to make more softer-edge family films to capitalize on one of the few growing segments of the moviegoing audience (see Monday's Times Business section).
That's not to say Pascal & Co. won't miss Bond.
"We grew to love these movies," Pascal said in a recent interview. "Obviously, we'd love to stay involved, but it's not our decision, it's MGM's."
True but then again, given MGM's current financial straits, never say never.
-- Claudia Eller
The Screen Actors Guild and the Alliance of Motion Picture and Television Producers have agreed to meet jointly with a federal mediator next Thursday in an effort to end the months-long stalement in contract negotiations, sources close to the negotiations said.
Federal mediator Juan Carlos Gonzalez called for the session after holding separate meetings with representatives on each side, said the sources, who asked not to be identified because they were not authorized to speak about the confidential discussions. Officials at SAG and the AMPTP declined to comment.
Actors have been without a contract since June 30, and the groups have not met since early July. They are divided over how actors should be paid for shows distributed across new media.
Last month, newly elected moderate members of the SAG board pushed for the idea of involving a federal mediator before taking the more drastic measure of a strike vote.
Gonzalez was involved last year in a mediation between studios and the Writers Guild of America. That effort, however, was unsuccessful and failed to prevent a 100-day strike that ended in February. The mediator's recommendations are not binding.
The prospects of a breakthrough in the SAG mediation appear dim, given how far apart the parties are. The biggest sticking point: SAG is seeking jurisdiction over all shows created for the Web, regardless of budget, to ensure actors are fairly compensated as the Internet becomes a major outlet for entertainment. Studios, however, have called the demand a nonstarter, contending it would limit their ability to experiment with online content and undermine agreements they've reached with three other unions.
-- Richard Verrier
The executive shakeout at billionaire Philip Anschutz's Walden Media continues with the departure of co-Chief Executive Cary Granat. For the better part of the year, Granat and everyone else in Hollywood knew that the co-CEO's days were numbered when the Walden brass began interviewing potential successors, including former Disney Studios executive Nina Jacobson. In March, the Century City-based entertainment outfit hired ex-Imagine Films' Michael Bostick as the top creative executive. Granat, who was forced to share his CEO title with Bostick, was basically relegated to overseeing Walden's "The Chronicles of Narnia" franchise.
As of Dec. 1, Granat will relinquish his executive duties at Walden but will be the company's creative consultant on the third film in the "Narnia" series, "Voyage of The Dawn Treader." Production has not yet been green-lighted but could be by month's end if the final script and budget are approved by Walden and its partner on the picture, Walt Disney Studios.
David Weil, CEO of Anschutz Film Group, said the budget has to come in "considerably less than $200 million" in order to get the go-ahead for production in the first quarter of next year. Although the first movie based on C.S. Lewis' classic childrens books, 2005's "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" was a blockbuster that grossed $745 million worldwide, its sequel, "The Chronicles of Narnia: Prince Caspian," which cost north of $200 million, was a big disappointment. Despite racking up $419 million in worldwide ticket sales, the movie is still in the red, according to a person familiar with the situation. The DVD is due out in early next month.
Walden has had a very mixed track record at the box office, with more misses than hits. The company had a surprise hit this summer with the 3-D sci-fi "Journey to the Center of the Earth," which Warner Bros./New Line released, but its most recent offering, "City of Ember," went down in flames.
Last month, Walden downsized Fox Walden, its 2-year-old marketing partnership with 20th Century Fox after a series of flops that included "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." Fifteen executives at Fox Walden were let go, and of that group, three moved to Walden and a few went to Fox.
Weil said that with Granat's departure, Walden -- which has about 57 employees -- has "no additional restructuring plans as of now."
Granat co-founded Walden in 2000 after leaving his 6 1/2 year executive gig at Dimension Films. Anschutz bought a majority interest in the company in late 2001. Granat and Walden co-founder Micheal Flaherty continue to own a minority stake in the company.
In a phone interview today, Granat said that after he, Anschutz and Weil tried "different configurations of how things might work, at the end of the day Michael [Bostick] was building out his slate and it was time to move on. Granat said he does not know what his next move is.
The company announced Thursday that Jay Fukuto was named head of the studio, overseeing all of the company's animation production operations for television, feature films, home entertainment, commercials and visual effects. Fukuto reports to Kent Rice, CEO of Starz Animation, a divison of Starz Media and parent company of Film Roman. Fukuto joined Film Roman two years ago and has been serving as the No. 2 executive in the company.
Conspicuously absent from the statement was any mention of Fukuto's predecessor, Scott Greenberg. A spokesman said Greenberg resigned from the company about two months ago to "pursue other opportunities." He was unavailable for comment.
A former entertainment lawyer, Greenberg was recruited by former owner IDT in 2003 to help turn the 24-year-old company around after years of heavy losses. In May 2006, IDT sold sold Film Roman along with home video company Anchor Bay and other assets, to Liberty Media in a deal valued at more than $200 million.
Greenberg helped to expand the company's core work-for-hire business with cable channels such as Comedy Central while building a library of original shows that Starz Media can distribute or license to others. The studio's titles include the recently-released “Dead Space: Downfall,” a made-for-television animated feature inspired by the Electronic Arts video game “Dead Space;” Marvel Animation’s “Marvel Superhero Squad;” and “Wow! Wow! Wubbzy!” on Nick, Jr.
Sumner Redstone's continued insistence that he has no plans to sell more shares of Viacom Inc. or CBS Corp. to satisfy lenders hasn't stopped panicked investors from continuing to shed their shares in the media companies. Viacom and CBS shares were hammered this week, suggesting concern among investors that Redstone will be forced to sell more stock as his family holding company National Amusements Inc. frantically attempts to work with bankers to restructure its massive $1.6-billion bank debt.
Redstone, who controls 80% of National, and his daughter Shari Redstone, who owns the remaining 20%, are under intense pressure to make an $800-million payment by Dec. 19.
Redstone released a statement Thursday insisting that the value of his assets, which also include a 1,500-screen theater circuit and the video game company Midway Games Inc., still exceeded National's debt. Once again he reiterated that he did not plan to sell any more stock in Viacom, whose holdings include Paramount Pictures and MTV Networks, or CBS, whose assets include the Showtime cable channel.
"The value of NAI's assets well exceeds its debt," Redstone said in the statement. "And, NAI has no intention of selling any stock of either Viacom or CBS."
The statement was in response to a deep dive that the stock of both companies took Wednesday. Viacom Class B shares fell $2.13, or 12%, to $15.14; they've dropped 66% this year. CBS, which has plummeted 78% this year, fell $1.59, or 21%, to $6.07.
However, both stocks inched up during the market rally Thursday. Viacom closed at $16.26, up $1.12, or 7%; CBS closed at $6.43, up 36 cents, or 5.9%.
Redstone also said in his statement that the negotiations to restructure National's debt were "proceeding in a smooth and constructive manner." People familiar with the talks suggest that no resolution is imminent.
Last month, Redstone sold $233 million in shares of Viacom and CBS when their tumbling prices violated debt convenants.
Many on Wall Street believe that Redstone will be forced to sell some assets to get his debt restructured. The 85-year-old media mogul hinted last week that he might put National's profitable theater circuit on the block or that its valuable real estate may be used to secure the debt. National also owns stakes in Illinois-based slot machine company WMS Industries Inc. and Chicago-based Midway Games, whose stock has also been pummeled.
-- Claudia Eller
If Screen Actors Guild Executive Director Doug Allen entertained any thoughts of returning to the NFL Players Assn., those were probably dampened Monday.
A federal jury in San Francisco ordered the NFL Players Assn. to pay $28.1 million in damages to retired players after determining that the union had ignored contracts covering reimbursement for use of their images in such things as video games and sports trading cards.
Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc. for which his wife, Pat, was formerly chief operating officer. Allen was a key witness in the trial, spending more than two days giving testimony.
Although Players Inc. generated generated millions of dollars for the union, many retired players complained that it deprived them of royalties from video games, trading cards and other sports products.
The union's attorneys argued that retired players weren't marketable and licensees like Electronic Arts were only interested in buying the rights of active players, a claim supported by Allen's testimony. Ultimately, however, jurors didn't buy it.
The NFL Players Assn. said it would file an appeal if the trial judge upholds the verdict.
-- Richard Verrier
Here's one award the studios won't be heralding in ads in the Hollywood trades.
Creative Screenwriting magazine, sponsor of the annual Screenwriting Expo in Los Angeles, on Friday will honor Patric Verrone, president of the Writers Guild of America, West, with its "Creative Screenwriting Person of the Year."
Verrone's writing credits include "The Tonight Show With Johnny Carson," the 1990s WB Kids series "Pinky" and the former Fox show "Futurama." But it was Verrone's leadership of the union during its 100-day strike that ended in February that was singled out by the magazine, citing his "contributions to advance the interest of screenwriters."
The strike culminated in a contract, modeled on an agreement previously negotiated by directors, that was hailed by writers as a landmark deal. Among other things, the pact established residual payments for writers whose shows are streamed on the Internet.
Said Bill Donovan, publisher of Creative Screenwriting: "Writers stuck their necks out, suffered financial sacrifices, walked peaceful picket lines, stood by each other, and won critically important matters of money and principle."
Not enough, apparently, to mollify another powerful constituency in Hollywood: the Screen Actors Guild, whose leaders blasted the key aspects of the agreement crafted by the other unions. The actors union has been without a contract since June 30, and its leaders have been meeting with a federal mediator in a last-ditch and seemingly improbable effort to avoid a showdown with the studios.
-- Richard Verrier
The studios will return to the bargaining table Monday -- but not with Hollywood's actors.
Instead, the Alliance of Motion Picture & Television Producers will resume contract negotiations that broke off this spring with the International Alliance of Theatrical Stage Employees. The contract would cover about 35,000 below-the-line film and TV workers.
IATSE and the studios have set aside three days next week in an effort to wrap up negotiations that were put on hold in April when the studios turned their attention to the Screen Actors Guild. More than six months later, however, the studios still don't have a contract with the actors. A federal mediator has met with each side but so far has not convened a joint meeting to resume formal bargaining. And sources on both sides of the divide have little confidence that the process will yield a breakthrough, moving SAG closer toward a potential strike early next year.
The prospects of a deal with IATSE are much better. There are some tough issues at stake for IATSE President Matt Loeb, who recently took over from longstanding union chief Tom Short. Citing higher health insurance costs, studios are seeking changes in the union's health and pension plan -- considered the most generous in the industry -- that may not go over well with the union's rank and file.
As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful "Saw" movie franchise and the popular cable TV series "Mad Men" and "Weeds," confirmed the cutbacks but declined to comment further.
Lions Gate's headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management's continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.
Over the last three years, Lions Gate's staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.
Even in light of the belt-tightening, Lions Gate's businesses are continuing to perform well. The studio's current release "Saw V" has grossed about $64 million worldwide since its Oct. 24 debut. The "Saw" franchise has blown past other long-running horror series, including "Friday The 13th," "Halloween" and "The Nightmare on Elm Street" to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate's AMC series "Mad Men" recently won the Emmy for best drama.
Hollywood is singing the holiday blues.
Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.
The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel. The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."
The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers. The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the high-def leap.
Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.
Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining.
"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc. "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."
The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.
Or maybe it's just that the movies weren't good enough to get people into the theaters.
Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.
Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray" were in theaters and "300" was out on DVD.
Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.
News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."
"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.
Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.
-- Dawn C. Chmielewski
Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight." Stephen Vaughan / Warner Bros. Pictures
Amid the tightening credit market, theater operator AMC Entertainment Holdings Inc. has pulled the plug on its planned initial public offering.
The Kansas City, Mo.-based company, whose lead investors include J.P. Morgan Partners and Apollo Management, said today in a filing with the Securities and Exchange Commission that it was withdrawing its $500-million stock offering. Speculation that the AMC IPO would be a tough sell has been circulating for nearly a year, even before the financial crisis hit, as attendance at movie theaters has stopped growing amid compeitition from online entertainment.
The privately held firm did not specify its reasons in the filing, but a company official cited the market volatility that has rocked Wall Street. "In light of current market conditions, the company's board of directors determined it was best to suspend the intial public offering," AMC spokeswoman Melanie Bell said Friday.
AMC originally filed a $750-million IPO in December 2006, as private equity firms looked to recoup some of their heavy investments in theaters. The company withdrew that offering in May 2007 after investors balked at the $17-a-share asking price. AMC announced plans for a scaled-back stock offering in September 2007.
The market for entertainment IPOs was bleak even before the recent meltdown on Wall Street. Venice-based visual effects company Digital Domain pulled its IPO plans after drawing a tepid response from investors in April.
-- Richard Verrier
It looks like Paramount Pictures may have found a co-parenting partner for Steven Spielberg and Peter Jackson's planned "Tintin" movie, which was orphaned after Universal Pictures opted out over financial concerns. Sony Pictures is close to finalizing a deal to pick up half of the cost of the 3-D motion-capture film, which is budgeted at $130 million before marketing expenses.
"Tintin," to be directed by Spielberg and produced by Jackson, could begin production before the end of the year if negotiations conclude next week, as expected. Spielberg, who has wanted to make "Tintin" since 1983 when his production company Amblin Entertainment was based at Universal, originally hoped to start shooting last month. But, after he and Jackson submitted a final budget and their rich profit-sharing deals to Universal, the studio passed, deeming it too risky. Under that deal, the picture would have to gross $425 million in revenue before Universal and Paramount could break even.
Based on a Belgian comic book series about the global adventures of a young reporter and his sidekick dog, "Tintin" has a loyal following abroad but is less well known in the U.S. In the deal currently discussed, Paramount would release the movie in North America, the United Kingdom and Asia. Sony would handle the film in Europe and Latin America.
Also risky is the fact that other motion or performance-capture films, in which actors' movements are recorded by body sensors and fed into a computer and manipulated, have had a mixed track record at the box office. Sony's "Monster House" grossed just $140 million worldwide, and Paramount's "Beowulf," $196 million worldwide -- far below the more than $400 million the studios need to earn their investment back on "Tintin."
Officials from Paramount and Sony declined to comment.
Spielberg and Jackson are hoping to make two "Tintin" films, with Jackson directing the second and Spielberg producing. But the deal being negotiated between Paramount and Sony is only for the first.
One risk at a time, guys.
-- Claudia Eller
Photo: Jacques Demarthon / AFP/Getty Images
Studio executives met Thursday afternoon with a federal mediator attempting against the odds to end the deadlock in contract talks with actors.
As a first step, the mediator, Juan Carlos Gonzalez, huddled last week with SAG President Alan Rosenberg and Executive Director Doug Allen. The two union leaders, who previously looked askance at the idea of enlisting the help of a mediator, laid out the union's priorities, especially securing the union's contracts for all Web shows, which the studios have stated is a deal breaker.
On Thursday, it was the studios' turn to bend Gonzalez's ear. During a three-hour meeting at the Alliance of Motion Picture and Television Producers' headquarters in Sherman Oaks, studio representatives presented details of the studios' "final offer" to SAG, and gave background information on agreements with three other unions that served as a basis for it. In a statement, the AMPTP said: "The federal mediator indicated that he will advise the parties as to the next step in the process."
People close to the talks expect Gonzalez will convene a meeting between the SAG and the studios to at least get the sides talking again -- which would be an achievement in itself, given that they haven't met since early July. Whether the talks will move the sides closer to a contract, or merely be an exercise in futility, is anyone's guess. For now, there are no signs of significant compromise in either camp. In fact, involving a mediator might just be the only thing they can agree on.
-- Richard Verrier
Media investors seem to be in a forgiving mood. CBS Corp. this morning reported a $12.5 billion third-quarter loss after slashing the book value of its radio and television stations, which was expected. Not counting the massive writedown of $14.1 billion, including $38 million in stock-based compensation for executives such as Chief Executive Leslie Moonves, net income clocked in in at 43 cents a share. That was in line with guidance that CBS provided earlier this month and beat analysts' estimates.
For the quarter that ended Sept. 30, revenue climbed 3% to nearly $3.4 billion, boosted by the sales generated from its online CNET Networks and the cable syndication deal of "CSI: New York." The company's net loss of $18.58 per share was in contrast with last year's third-quarter profit of $343.3 million, or 49 cents per share.
In mid-day trading, CBS was at $9.41, up 69 cents from the opening bell.
Despite its flagship CBS network kicking off the new television season in first place, the company has been slammed by the ailing economy. CBS derives more than 70% of its revenue from advertising, making it the most exposed of all the large media companies to a recession. Television advertising revenue was down 14% compared to the third quarter of 2007. Moonves attributed the drop to lower prime-time ratings at the broadcast network this summer, in part, because CBS was up against NBC's highly-rated coverage of the Olympic Games in Beijing.
Moonves said that declines in commercial spending from car companies and dealerships, major advertisers to the network and local stations, might soon level off. "I can't imagine the auto category getting much worse than it is right now," Moonves said.
-- Meg James
Harvey Milk would have been proud.
More than 1,400 people flocked to the San Francisco world premiere of "Milk" Tuesday night, the movie that chronicles the life and times of the gay activist politician who was slain 30 years ago along with the city's mayor, George Moscone. Milk might also have had a case of deja vu seeing throngs of people lining the sidewalk across the street from the Castro Theatre holding "No on 8" protest signs demonstrating against the ballot measure that would eliminate the rights of same sex couples to marry. The crowd chanted, "Unfair and wrong, no on eight," and "Love is great, no on eight."
When Milk, a former New Yorker, served on the San Francisco Board of Supervisors as the first openly gay man to be elected to public office in America in 1977, he fought a similar battle against the anti-gay Proposition 6, backed by singer Anita Bryant and California State Sen. John Briggs. "Thirty years later, it's the same fight," said James Schamus, chief executive of "Milk's" financier and distributor, Focus Features.
Schamus took the stage at the historic Castro Theatre, alongside the film's director, Gus Van Sant, and San Francisco Mayor Gavin Newsom. Van Sant thanked the crew and cast members, many of whom were in attendance, including Sean Penn (who plays Milk), Emile Hirsh and Josh Brolin. Newsom described San Francisco as a place that "not just tolerates diversity, but celebrates diversity ... a city where you can live your life out loud." Shot entirely in San Francisco, the approximately $20-million "Milk" included 4,000 local extras — which may be a far cry from the reputed 300,000 extras used in "Gandhi," but at least they were real people and not digitally created as sometimes happens nowadays.
The post-premiere party was held at City Hall, where Milk and Mascone were gunned down in 1978 by former City Supervisor Dan White (played by Brolin). As attendees sipped martinis and nibbled on sushi and cold shrimp with dance music on loudspeakers, several people couldn't help remarking how it was a little eerie to be celebrating in the same venue where the popular politicians were murdered.
"Milk" opens in select theaters on Nov. 26, and then expands nationally in December.
— Claudia Eller
Photo: Noah Berger/AP
Democratic presidential nominee Barack Obama’s half-hour campaign commercial is scheduled to run Wednesday night on all of the major television networks – except ABC.
The senator from Illinois this month arranged to buy Wednesday's 8 p.m. to 8:30 p.m. slot on CBS, NBC and Spanish-language network Univision. Fox Broadcasting joined the field after Major League Baseball agreed to delay the start time of Wednesday's World Series game.
Walt Disney Co.-owned ABC, however, initially balked at selling its 8 p.m. Wednesday slot, saying it didn’t want to bump its regularly scheduled series, “Pushing Daisies,” even though the whimsical show has been struggling in the ratings.
ABC executives said the earlier decision not to accept the Obama infomercial was due to the problem of filling the second half hour of the 8 p.m. to 9 p.m. time period – and not for political reasons. (Scheduling conflicts did not stop NBC from quickly clearing its hour to make room for the commercial. NBC preempted its hour-long series “Knight Rider” and expanded the game show “Deal or No Deal” from 60 to 90 minutes to fill the extra time.)
CBS pushed “The New Adventures of Old Christine” to 8:30 p.m. and dumped an episode of its new series “Gary Unmarried.” Fox persuaded Major League Baseball to delay by about 15 minutes the start time of Wednesday’s game so the network could air the Obama ad at 8 p.m. in the Eastern and Central time zones. In California, the campaign commercial will follow the game.
Then, about 10 days ago, ABC changed its mind. It told the campaign the Wednesday 8 p.m. slot would be available after all. “We ultimately offered them the time slot that they had requested,” a network spokesman said today.
ABC had planned to charge slightly more than $1 million for the half hour, a higher rate than what Fox, CBS and NBC charged the Democrat for their time.
But it was too late.
“We had already committed our resources by the time they offered us the time,” said an Obama campaign spokesman.
That explanation struck some as odd, however, given the Obama money-raising machine generated $150 million in donations in September alone. “The Obama campaign has the resources,” said Peter Sealey, adjunct marketing professor at the Peter Drucker Graduate Management School at the Claremont Graduate University.
Sealey said that if the Obama campaign had bought the time on ABC it would have accomplished the rare feat of what’s called a “roadblock.” Channel flippers would have a hard time avoiding the ad because it was seemingly everywhere.
“It’s amazing that they got everyone – but not ABC, one of the top-rated television networks,” Sealey said. “Maybe the campaign decided that they didn’t need the extra ratings points.”
-- Meg James
It was only a matter of time before Club Penguin's online inhabitants waddled into retail.
Walt Disney Co. has licensed a toy line based on its popular virtual world for kids -- just in time for the holidays.
As with the avatars that wander the snow-covered online community, these stuffed penguins and plastic figures come dressed in an assortment of costumes (bees, aliens, superheroes, pirates, etc.). Even their virtual pets, known as "puffles," can be found in plush, selling for $10 each.
Such a move by Disney Consumer Products was all but inevitable after Disney's acquisition of Club Penguin in August 2007. Until then, Club Penguin sold a limited assortment of stuffed puffles as a promotional item, but had not created a full line of toys inspired by the flightless waterfowl.
Hollywood learned long ago that penguins are box-office gold.
The documentary "March of the Penguins" was the sleeper hit of the summer of 2005, grossing more than $77.5 million for Warner Independent Pictures. The following summer, Warner Bros. reprised the penguin theme with the animated hit "Happy Feet," which sang and danced up $198 million in domestic box office.
Disney could lay claim to giving penguins their cinematic debut as Dick Van Dyke's dancing partners in the 1964 film "Mary Poppins."
-- Dawn C. Chmielewski
(Photo of the 6.5-inch stuffed figure courtesy of Stuart Ramson for Disney Consumer Products).
FilmL.A., the nonprofit group that coordinates on-location film permits for the city and much of Los Angeles County, has tapped a Hollywood outsider to run the organization.
FilmL.A. said Monday that it had hired Paul Audley, formerly Arizona state director for the conservation group Trust for Public Land, as its new president. Audley replaces Steve MacDonald, who resigned this year to take another job.
Despite his lack of experience in the entertainment industry, Audley was tapped for his skills as a consensus builder and experience working with nonprofit organizations. Audley, 51, is a former mayor of Fairfield, Conn. He also served as Connecticut's deputy secretary of state.
Audley will face a daunting challenge in his new job. The organization has struggled in recent years to balance the needs of filmmakers and residents who've grown increasingly impatient about filming in their neighborhoods, prompting calls for the city to improve efforts to enforce film permits.
"You have competing interests all being served by the same organization,'' Audley said. "I have a huge amount to learn, but I'm a quick study."
-- Richard Verrier
Photo: Paul Audley, who replaces Steve MacDonald at FilmL.A.
One of the things about being a small Hollywood studio is that results swing heavily based on the performance of single film. That will be amply demonstrated Tuesday when DreamWorks Animation SKG releases its third-quarter earnings.
"Kung Fu Panda," which was released in June, has become one of DreamWorks' most successful movies, generating $630 million in worldwide ticket sales. The movie's box-office performance -- it hasn't come out on DVD yet -- has prompted some analysts to raise DreamWorks earnings estimates for the year.
But as good as it is, "Kung Fu Panda's" performance won't be enough to overcome unfavorable comparisons, thanks to the even better showing of "Shrek 3" in the same period last year. As a result, net income for DreamWorks Animation is expected to decline 34% to 31 cents a share, while revenues are forecast to drop 19% to $130 million, according to analysts polled by Thomson/First Call.
Despite the mayhem on Wall Street, however, analysts generally are upbeat about DreamWorks' outlook, viewing the company as less vulnerable to an economic downturn because, unlike some of the larger studios, it doesn't have any major advertising-supported businesses. And they have high hopes for "Madagascar: Escape 2 Africa," which debuts Nov. 7. Wedbush Morgan Securities analyst Michael Pachter predicts the "Madagascar" sequel will do nearly $450 million in worldwide ticket sales.
"I think they will do well in the economic downturn," Pachter said.
To be sure, DreamWorks faces challenges. The studio has banked heavily on 3-D technology, which has been slow to take hold in theaters. And DreamWorks has yet to match the track record of its rival, Walt Disney's Pixar Animation Studios, which scored its ninth consecutive critical and commerical hit this summer with "Wall-E." (Disney's in-house animated feature, "Bolt," hits theaters Nov. 21.)
"Kung Fu Panda was very successful,'' said Doug Creutz, a media analyst with Cowen & Co. "The key for them is to show that they can do that consistently and not just once every few years."
To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.
According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion.
The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.
The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.
Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.
“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.
And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.
Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.
“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”
EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.
"An awful lot has happened since then," he says. "EMI is a company going through radical change."
*Photo: Katy Perry. Credit: Kevin Winter/Getty Images
Digital Domain, the Venice-based visual effects company that tried unsuccessfully to go public this spring and is facing stiff competition in its core business, shuffled its senior management late Thursday.
The Academy Award-winning firm, best known for creating the digital effects behind such movies as "Transformers" and "Titanic," has named Cliff Plumer chief executive officer. Plumer had joined the company in 2006 as chief technology officer after a 10-year tenure at ILM and Lucasfilm. He replaces Mark Miller, who remains the company's president, according to a statement.
The company also named a new chief financial officer, Kevin Weston, a former LucasArts executive who will work with Plumer to develop the company's long-term plan to expand into the video game business. He replaces Yvette Macaluso, who has resigned for personal reasons, a company spokeswoman said.
The changes come six months after Digital Domain's planned IPO drew a lackluster response from investors. The company wanted proceeds from a public offering to pay down debt and eventually transform itself from a work-for-hire commercial and movie effects house into a full-fledged production studio with its own pipeline of computer-animated movies and video games.
Digital Domain says the management moves do not signal a change in longterm strategy.
Co-founded 15 years ago by "Titanic" director James Cameron, Digital Domain was acquired in May 2006 for $35 million by a group of investors led by director Michael Bay, the company's co-chairman. A new management team has invested heavily in hiring employees, upgrading equipment and acquiring a software firm.
Those investments, along with industry challenges, have hit Digital Domain's bottom line. In 2007, the company posted a $20-million loss on revenue of about $79 million, according to its SEC filing. Like other visual effects houses, Digital Domain has been squeezed in recent years by competitors in Europe and Asia that are able to produce effects for a fraction of the cost, as well as by studios' demands to produce splashier effects for less cost.
-- Richard Verrier
The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.
Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.
The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.
"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.
Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.
Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.
Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.
Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists.
In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.
"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."
So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.
"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."
Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.
-- Swati Pandey
Photo (top): Axl Rose. Credit: George Chin
Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images
No one has ever accused the Alliance of Motion Picture and Television Producers of being hasty. Four days after the actors called for bringing in a federal mediator to resolve stalled contract negotiations, the studios finally got around to giving an answer: OK, but don't expect much.
The Alliance of Motion Picture and Television Producers, which bargains on behalf of the studios, said in a statement today that "we are, of course, willing to meet with a federal mediator in the hopes of achieving our fifth guild agreement this year."
But the alliance also downplayed expectations of a breakthrough, warning that it will be "difficult to reach an agreement if SAG continues to insist unreasonably that it deserves a better deal than the ones achieved by other entertainment guilds during far better times."
The decision was not unexpected given that the studios would have risked a backlash had they rejected the offer, which was made on Sunday by SAG's national board. Actors have been working without a contract since June 30.
-- Richard Verrier
Photo: Nick Counter, president of the Alliance of Motion Picture and Television Producers. Credit: Gary Friedman / Los Angeles Times
While awaiting word from studios on whether they will agree to bring in a federal mediator to resolve a contract dispute, Screen Actors Guild Executive Director Doug Allen has some other business to tend to. Allen is scheduled to testify Wednesday in a trial involving his former employer, the NFL Players Assn.
The trial, which began in San Francisco on Monday, stems from a federal class action lawsuit brought by a group of retired players who allege their union deprived them of millions of dollars in royalties from video games, trading cards and other sports products.
Allen, who was the assistant executive director of the NFL Players Assn. before joining SAG nearly two years ago, is not named in the lawsuit. But the case centers on an organization that he was intimately connected with. Allen helped launch a licensing and merchandising corporation called Players Inc., for which his wife, Pat, was formerly chief operating officer.
The venture generated millions of dollars for the union and was widely considered a success -- so much so it became a chief selling point when Allen was in the running for his current job at SAG, which wanted to create a similar licensing division to benefit actors. But the activities of Players Inc. also drew the ire of many retired players, who contended that the licensing arm diverted millions of dollars in revenue to support the perks and salaries of union staff.
The union dismisses the claims as baseless and contends that most companies, including Electronic Arts and trading card outfits such asTopps, had little interest in buying the rights of retired players who weren't very marketable compared with active players.
Allen declined to comment. Not surprisingly, he's working on a game plan to revive contract talks that have gone nowhere since the actors contract expired June 30. At this point, it might take a Hail Mary pass.
Photo: Doug Allen by Anne Cusack/Los Angeles Times
UPDATE: A spokesman for Sumner Redstone issued the following statement: “After five and a half years together, we have amicably ended our marriage. While this is a difficult decision for both of us, we remain close and supportive friends and are committed to each other's continued happiness and success. We will have no further comment and hope that you will respect our privacy. "
Sumner Redstone has filed for divorce from his wife of five years, Paula Fortunato, citing irreconcilable differences. The court papers were submitted Friday, Oct. 17, in Los Angeles Superior Court.
The two were married in April 2003. The couple's prenuptial agreement stipulates that the 46-year-old Fortunato will receive at least $5 million, or $1 million for each year that she has been wed to the media mogul, according to people who are familiar with terms of the couple's agreement.
Redstone, 85, has been telling friends for weeks that his marriage to Fortunato, 46, was ending. But despite the divorce filing on Friday, the troubled couple continued to socialize together through the weekend with several current and former Paramount executives, including the studio's current chairman, Brad Grey. Paula Redstone has since left their mansion in the gated private enclave of Beverly Park that sits high above Beverly Hills to visit family in New York and New Jersey.
Any divorce settlement would come out of Sumner Redstone’s own pocket, and not his family's Boston-based business, National Amusements Inc., said two people close to the firm. National Amusements is caught in a credit squeeze and Redstone's daughter, Shari Redstone, who runs the company, is trying to restructure its nearly $1.6-billion debt load, including an $800-million bank loan that is due in mid-December. Sumner Redstone controls 80% of National Amusements; his daughter holds the remaining 20%. If National Amusements is unable to come to an agreement with bankers, it might have to sell off more shares of Viacom Inc. or CBS Corp., two publicly traded companies that Redstone controls, to pay down the debt.
The Beverly Hills law firm representing Sumner Redstone, Kaufman, Young, Spiegel, Robinson & Kenerson, declined to comment.
The merger of Fortunato, a former third-grade teacher in New York City, and Redstone culminated after a blind date arranged by a mutual friend and executive at Bear Stearns & Co, according to the couple's 2003 wedding announcement in the New York Times. It is worth noting that Bear Stearns also did not survive.
-- Claudia Eller and Meg James
Photo: Paula Fortunato and Sumner Redstone by Chris Pizzello/Associated Press
Looking for ways to slash overhead, Universal Pictures is in talks with Ryan Kavanaugh's Relativity Media to unload the studio's genre label Rogue Pictures. Though the four-year-old film unit has been profitable for Universal, the studio began soliciting buyers a few months ago, according to one person close to the matter. Negotiations with Kavanaugh dovetail with his recently struck deal to co-finance 75% of Universal's annual movie slate.
Like all studios, Universal is under pressure from parent company NBC Universal -- owned by General Electric -- to tighten its belt. Late last week, as the worsening economy washed across Hollywood, NBC Universal chief Jeff Zucker mandated $500 million in companywide cuts, which would amount to a 3% reduction in the media giant’s annual budget.
If the deal closes, Relativity could wind up paying more than $100 million for Rogue, which has a library of at least 13 titles including the summer release “The Strangers,” plus dozens of projects in development. The label also has four films scheduled for release: “Fighting,” starring Terrence Howard and Channing Tatum; “The Unborn,” written and directed by David Goyer; “Last House on the Left,” a remake produced by Wes Craven; and “25/8,” directed by Craven.
It is unclear what would become of Rogue’s seven-member staff, headed by Andrew Rona. One person close to the studio said that Universal might negotiate a producer deal with Rona.
Universal would continue to market and distribute Rogue’s movies for a fee that one person pegged at about 10%.
Executives from Universal and Relativity declined to comment.
-- Claudia Eller
Photo of Ryan Kavanaugh by Michel Kelly for the Los Angeles Times
The only question is what took them so long ...
The battling robots of "Transformers" will return -- as a 3D ride at Universal Studios Hollywood and Singapore. Universal Parks & Resorts said it would create a ride that blends special effects and robotics in a ride that debuts in 2011 in Asia and, shortly thereafter, in Los Angeles. The movie's director, Michael Bay, and its executive producer, Steven Spielberg, will collaborate on the attraction, based on the 2007 summer blockbuster.
-- Dawn Chmielewski
Renderings courtesy of Universal Parks & Resorts.
Although the Los Gatos, Calif.-based DVD rental company’s revenue increased, thanks to a bigger subscriber base, subscriber growth declined 9% in the quarter ended Sept. 30 compared to the same period last year. Netflix had lowered its expectations in an announcement earlier this month.
The company also lost subscribers at the same rate as last year. Netflix had anticipated higher retention as consumers grew more accustomed to the Web-driven Netflix model of paying a monthly fee for all-you-can-watch movies by mail and by instant stream.
Still, the news isn’t too bad overall. Revenue increased 16% to $341.3 million, and total subscribers grew 23% to 8.7 million. Net income increased 31% to $20.4 million, or 33 cents a share. That beat the expectations of analysts surveyed by Bloomberg by 2 cents.
The economy wasn’t Netflix’s only problem during the third quarter. Must-see television events like the August Olympics and the political conventions lured viewers away from rentals, and Netflix had a brief shipment stoppage (which also cost the company $6.5 million in customer credits).
And Netflix might be better positioned than most companies to weather the credit-crunched months ahead, thanks to its solid subscriber base and its adoption of new technologies.
In a compromise struck between divided camps within the actors union, the national board of the Screen Actors Guild called for bringing in a federal mediator to break the logjam in contract talks with the Hollywood studios, putting off more drastic plans to seek strike authorization from members.
The resolution appeared aimed at finding a middle ground between union hard-liners who wanted an immediate strike vote to give their leaders leverage in stalled contract negotiations and moderates opposed to such action who recently won key seats on the national board and now have a voice in setting its direction.
But SAG’s desire to bring in a federal mediator drew a noncommittal response from the Hollywood studios, which have been adamant that the actors will not get a new contract substantially different from those already negotiated by other talent unions -- and in a dash of hardball rhetoric pegged to the worsening economy the studios hinted actors may now even get a worse one.
“There is simply no justification for SAG to expect a deal that is in excess of what the other guilds negotiated in better times,” the Alliance of Motion Picture and Television Producers, which negotiates on behalf of the major studios, said in a statement.
Meeting at the Los Angeles Marriott Downtown, the national board also agreed to give the union’s negotiating committee authority to seek a strike vote should the mediation efforts fail. The vote came in the first board meeting since a group of moderate actors supported by Tom Hanks and Sally Field won key board seats in the Hollywood division, tilting the balance of power away from the more hard-line incumbent group known as Membership First, which dominates the union’s negotiating committee.
“We hope mediation will help move the process forward,” SAG President Alan Rosenberg said in a statement. “Economic times are tough for all Americans, but we must take a stand for what is fair.”
When a group of actors supported by Tom Hanks and Sally Field won key seats on the national board of the Screen Actors Guild last month, many hoped the guild might finally find a way to break the logjam in contract talks with the studios. After all, the election gave moderates a slight majority over the incumbent and more hard-line faction known as Membership First.
But that optimism has been tempered by some harsh political realities facing the newcomers, who will face a tough decision Saturday when the 71-member national board meets for the first time since the election. The biggest issue on the agenda: deciding whether members should vote to grant strike authorization to their leaders.
Predicting the outcome is stumping even veteran SAG watchers. And the new moderate Hollywood board members from the Unite for Strength slate have been conspicuously quiet since SAG's negotiating committee recommended that the board approve a strike vote. Ned Vaughn, spokesman for the group, declined to comment. "Private Practice" star Amy Brenneman, the top vote-getter in the recent elections, could not be reached.
Conventional wisdom holds that moderates will reject the proposed strike authorization on the grounds that a positive vote would be extremely difficult to achieve during the current recession. If unsuccessful, it would also expose the union to a humiliating defeat.
But that's not a given. Some of the new Hollywood board members think opposing a strike vote would allow hard-liners to unfairly portray them as obstructionist, forcing them to the take the political heat for a problem they didn't create. That, in turn, could hurt their chances to secure further gains in future board elections and achieve their ultimate goal: merging with the smaller actors union, the American Federation of Television and Radio Artists.
No doubt, SAG leaders will reassure board members that voting for a strike authorization is not the same as voting to strike, that it will give them the leverage they need to close a deal and that the board will still have final say to call a walkout if all else fails.
Although it's unlikely, a strike authorization, which requires approval by 75% of voting members, is still a possibility despite the dire economy. The fact is, the vast majority of SAG's 120,000 members don't work regularly and have less to lose by a walkout than the working actors who comprise a small fraction of the guild.
Even if it passes, however, it's not clear what effect a strike authorization would have. Studio chiefs have flatly rejected SAG's cornerstone demand -- securing jurisdiction for all Web shows, regardless of budget -- arguing that doing so would alter a new-media framework already agreed to by writers, directors and actors who belong to AFTRA.
In other words, this drama won't end any time soon.
-- Richard Verrier
Photos: SAG President Alan Rosenberg and Executive Director Doug Allen (Carlos Chavez / Los Angeles Times); Amy Brenneman (Michael Buckner / Getty Images); Ned Vaughn (courtesy of the actor)
NBC Universal President Jeff Zucker is calling for $500 million in cuts across the company next year, citing the slowing global economy and a drop in consumer confidence.
Zucker said in a memo circulated Friday that he asked department heads to recommend cuts in staffing, promotional expenses and in discretionary spending, such as travel, entertainment and outside consultants. These reductions represent 3% of the company's budget, which comes to $16.7 billion.
The cuts were first reported by Broadcasting & Cable.
NBC Universal's announced cutbacks come as the worsening economy is taking its toll on Hollywood -- even though NBC just came off a great quarter thanks to the Beijing Olympics. Viacom and CBS Corp. slashed profit forecasts last week, and Sumner Redstone's theater chain announced it would sell Viacom and CBS shares to pay down debt. Merrill Lynch also downgraded the Walt Disney Co., citing concerns that its resort, broadcast and consumer products would suffer in a weakening economy.
The Zucker memo in full:
"We are living in a time of unprecedented economic challenges, and it is increasingly clear that the worldwide economic slowdown will continue well into next year.
As we have been working on our budgets and planning for 2009, it has become evident that the decline in consumer confidence and spending will impact our operations. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009. We are asking for a reduction of approximately $500 million across the company, which represents about 3% of our overall budget.
While each business leader has flexibility in how to meet this goal, we have asked them to focus on three areas: reductions in promotion expenses; in discretionary spending, such as travel and entertainment and outside consultants; and in staffing costs. We have also asked them to find savings by going through our Sourcing department for all major purchases.
This kind of message is never easy, but it is the right step to make, and the right time to make it. We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy.
We have an incredible portfolio of strong, dynamic, world-class brands across the global media landscape. We are as well positioned as any media company today; these moves will ensure that we continue to be so.
Thank you for your support.
Photo: NBC Universal President Jeff Zucker. Credit: Mark Lennihan / Associated Press
U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.
Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.
U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.
Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.
Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.
Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.
-- Swati Pandey
Photo: U2's Bono. Credit: Martin Meissner / Associated Press.
Facing a slowdown in advertising, NBC Universal's Spanish-language television operation has cut 85 jobs, reducing its workforce 5%.
"We are basically adjusting to reflect the economic realities of the current market," spokesman Alfredo Richard said. The employees were notified of their terminations last week.
The cuts come despite Telemundo's recent prime-time ratings success, led by a remake of the popular Colombian telenovela "Sin Senos No Hay Paraiso," ("Without Breasts there is no Paradise"). The 10 p.m. program, which follows the tale of a poor woman who gets breast implants in order to woo a wealthy drug dealer, has been averaging 1.9 million viewers a night in October, a substantial lift over shows that have run in that time period.
Telemundo separately confirmed that it has relieved its top programmer, Carlos Bardasano, of his duties and are not going to replace him. However, Bardasano will stay on as a consultant.
The NBC-owned network, despite its lower advertising rates, is not immune from the slowdown in advertising that is hammering English- and Spanish-language television stations alike.
"Trends continue to worsen across the media landscape, as broad-based uncertainty has advertisers reigning in spending," Wachovia Capital Markets said this week in a research report. "We're seeing and hearing evidence that weakness accelerated late in third quarter. While political money is flowing in, the bulk of the spending remains in the approximately 10 swing states."
This isn't the first employee retrenchment for Telemundo. Two years ago, the company laid off 110 people, primarily in its TV station group.
-- Meg James
Photo: The stars of "Sin Senos No Hay Paraiso." Credit: Telemundo
Plenty of people fantasize about meeting celebrities. How about inhabiting their bodies and mouthing their lines?
A new website called Mashface lets users choose photos of celebrities and superimpose webcam recordings and sound effects to make -- presumably -- humorous video messages that they can post on social network sites like YouTube. "You can do things like make Britney give parenting advice, or have Brad Pitt remind your friend of something stupid he did the night before," touts a press release from the site's creator, Montreal-based Xtranormal Technology Inc.
But Mashface wasn't drawing laughs from the Screen Actors Guild, which has been fighting to protect the exploitation of actors' images and likenesses on the Web. "I'm sorry, it's not a harmless form of expression when you're taking people's images and holding them up to ridicule,'' says Kent McCord, who chairs SAG's new-technologies committee and who played recurring roles on "Dragnet" and "Adam-12," among other series. "It's a violation of the law."
Ricky Cheung, executive producer of Xtranormal, disputes that assessment, saying the images on Mashface are a form of parody and therefore covered by the "fair use" doctrine under federal copyright law. The company launched Mashface two weeks ago to help drive traffic to another website that allows people to make their own animated movies, and has since drawn 50,000 visitors, Cheung says.
Actors have long been sensitive to how their images are used. The guild joined Fred Astaire's widow in 1999 to push successfully for a California law to protect the images of deceased celebrities after a commercial featured Astaire dancing with a Dirt Devil vacuum cleaner. Then last year, California passed a more comprehensive protection law after Marilyn Monroe's face began appearing in unauthorized products, including "Marilyn Monroe hipster panties" sold on the Internet.
More recently, SAG balked at a studio proposal that would allow the studios to sell or license excerpts of TV shows and movies for use on the Internet, cellphones and other new-media devices without actors' consent. Instead, the studios proposed obtaining blanket consent at the time an actor is hired. The sides are still haggling over just how that would work.
Barry Tyerman, an entertainment attorney whose celebrity clients include Robert Redford and Sean Connery, says he is not familiar with Mashface but believes it typifies the widespread exploitation of actors' images across the Web.
"We spend a fair amount of time writing cease-and-desist letters to various websites,'' he says. "It's like stamping out ants at a picnic."
-- Richard Verrier
Photo: A mashup from Mashface.com
Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.
Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).
It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”
So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.
“They’re going after every venue that Ticketmaster controls,” he says.
Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.
On Tuesday, Live Nation shares rose 1.22% to $13.32.
*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.
The bitter feud between billionaire Sumner Redstone and his daughter, Shari, erupted again Tuesday over the murky circumstances surrounding the sale of $233 million in non-voting Viacom Inc. and CBS Corp. shares by the family’s privately held National Amusements Inc.
Last Friday, National Amusements disclosed that it needed to raise cash to comply with debt covenants on a $1.6-billion loan. The purpose of the loan is unclear, and the firm has declined to provide an explanation. On Tuesday, the Wall Street Journal reported that the money was needed in large part to expand National Amusements’ chain of 1,500 movie theaters, which is run by Shari Redstone.
Dedham, Mass.-based National Amusements late Tuesday — at Shari Redstone’s urging — released a carefully worded statement that appeared to take issue with the Journal’s story.
“National Amusements’ recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock,” the statement said. “The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate.”
Sumner Redstone, 85, is chairman of Viacom as well as CBS, and he controls 80% of National Amusements. Shari Redstone holds the other 20%. Last year, the two Redstones battled publicly over issues of corporate governance and succession at Viacom and CBS.
Shari Redstone was once thought to be the heir apparent to her father; however, the octogenarian mogul publicly dismissed the notion that his daughter “automatically” would succeed him. Since then, the two sides have engaged in talks to potentially sever their business ties. But the talks seemed to have stalled.
The drama unfolds as the family’s empire has lost value. Viacom and CBS shares are down more than 50% since the beginning of the year.
-- Claudia Eller
Photos: Shari (Evan Agnostini/Getty Images); Sumner (Mel Melcon/Los Angeles Times)
By now, you'd think Jon Feltheimer would be running one of Hollywood's big media companies or major studios. But no, the 57-year-old executive says he's content heading a mavarick mini-major, and who can blame him? The industry vet just signed on for 5 1/2 more years as co-chairman and CEO of Lionsgate, and got a boatload of stock grants in the bargain.
Felt, as he's widely known in the industry, says he can't imagine a better place to work. Lionsgate, the Santa Monica-based producer behind the "Saw" and Tyler Perry movies as well as the Emmy winning "Mad Men" TV series is one of the last standing independent film and TV studios in Hollywood.
"We're small enough to be agile, but when you look at our filmed entertainment business, we're getting up into the major leagues," says Feltheimer, who was a TV executive macher for nine years at Sony before joining Lionsgate in 2000.
Since then, Lionsgate's revenue has grown from $184 million to $1.4 billion in fiscal 2008 (OK, so it lost $74 million last year, thanks mostly to higher movie marketing costs, but it did bounce back to profitability in the last fiscal quarter). Under Feltheimer, the studio has diversified through acquisitions including independent production companies Artisan Entertainment (which released "Blair Witch Project") and Mandate Pictures (producer of "Juno"), Redbus Film Distributors (now called Lionsgate U.K.) and the Debmar-Mercury television distribution and syndication company.
Feltheimer also oversaw the launch of the Fearnet horror channel with partners Sony and Comcast, and investments in Break.com, an online viral marketing company aimed at young males, as well as independent film producer and distributor Roadside Attractions.
It looks like Lionsgate really wanted to keep Feltheimer: It offered him a contract extension nearly three years before the expiration of his current one -- although his annual base pay of $1.2 million remains fixed until 2011. At that time, he will get what amounts to a cost-of-living raise pegged to local economic indices.
The payoff, however, comes in stock. He was granted 458,036 in time-vesting restricted shares and an additional 458,035 in performance-vesting shares, with the first grants available in 2012.
"I'm still the lowest paid executive in town," says Feltheimer.
In Hollywood, of course, low can be pretty high.
-- Claudia Eller
Photo: Jon Feltheimer. Credit: Vince Bucci / Getty Images
By this weekend the nonbelievers will be able to shout, "Hallelujah!"
Bill Maher and Larry Charles' "Religulous," a satiric diatribe on modern religion that opened Oct. 1, will soon pass "Expelled: No Intelligence Allowed," an argument for the teaching of intelligent-design theory in academia and a favorite of the faith crowd, as this year's highest-grossing documentary movie.
Which just goes to show that when it comes to religion and movies, the box office is agnostic.
"Expelled," hosted by commentator and character actor Ben Stein, opened April 18 at a whopping 1,052 theaters and grossed a total of $7.7 million at the domestic box office during its full run, according to data tracker Box Office Mojo.
That was nothing like the breakout blockbusters "Fahrenheit 9/11" ($119.2 million), "March of the Penguins" ($77.4 million) or even "An Inconvenient Truth" ($24.1 million), but nothing to sneeze at either: It was the 12th-highest gross ever for a documentary.
"Religulous," financed by Los Angeles indie film company Thousand Words at a budget of about $3 million, is being distributed domestically by Lionsgate, which has also handled such incendiary fare as "Fahrenheit 9/11" and Oliver Stone's upcoming political drama "W.," starring Josh Brolin as the president.
"Religulous," playing at 568 theaters, is benefiting from positive word of mouth. The controversial documentary, hosted by comedian Maher ("Politically Incorrect") and directed by Charles ("Borat"), dropped only 35% in its second weekend, compared with the industry average of about 51%. By Monday it had topped $7 million, on pace to surpass $7.7 million by Friday and ultimately to a spot in the all-time top 10 for the documentary genre.
"We're the anti-'Passion of the Christ,' " said producer and Thousand Words principal Jonah Smith, whose company is known for such art-house films as "Requiem for a Dream" and "A Scanner Darkly." "We're the movie for everyone else, the people who are skeptical."
-- Josh Friedman
Photo of Larry Charles and Bill Maher by Nathan Denette / Associated Press. Photo of Ben Stein by Steve Cannon / Associated Press
Colin Callendar, the man most responsible for HBO's ambitious, sophisticated and hugely expensive original movies, announced this afternoon that he was leaving his corporate home of the last 20 years.
"This was solely my decision to leave and return to my entrepreneurial roots," the former independent producer told a klatch of reporters during a telephone conference call. "This is one of those rare occasions where the story that you are being told really is the story."
The move was not entirely unexpected. The gravy years of HBO are over and the premium channel is under pressure to find The Next Big Hit. Recent attempts such as "John From Cincinnati" wiped out. And most of Callender's trademark productions, including the upcoming $200-million World War II drama "The Pacific" from Steven Spielberg and Tom Hanks, make corporate executives nervous because making the money back in foreign sales and DVDs is no longer such a sure thing.
Callender also lost some of his power in a management shake-up after former HBO Chairman Chris Albrecht was forced to resign last year. Albrecht's departure led to the installation of a top-heavy management structure. Instead of reporting directly to the head of HBO, he was knocked two levels down, reporting to Michael Lombardo, president of West Coast operations, who in turn reports to Richard Plepler, co-president of HBO. Callender's departure follows that of another top Albrecht lieutenant, Carolyn Strauss, who stepped down in March.
Callender, who guided such mini-series as "Angels in America" and "John Adams" to the small screen, said he would form his own company in 2009. He said he was excited by the intersection of traditional media with digital media, and would likely do business with HBO. However, he said he would not have an independent production deal at HBO, one of the most profitable divisions of media giant Time Warner Co.
HBO executives said Callender would not be replaced. Instead, two of his subordinates will assume his duties. Kary Antholis will become president of HBO Miniseries and Len Amato will become president of HBO Films. Both will report to Lombardo.
Callendar said today that he would assist in the transition for about another month before leaving HBO.
-- Meg James
As has been widely expected, Steven Spielberg and Universal Pictures announced early today that Universal will become the distributor for movies produced by a new studio formed by Spielberg and partner Stacey Snider.
Under the deal, which will take effect in late 2009, Universal will distribute about six films a year produced by the new studio backed by India's Reliance ADA Group.
The expected move comes shortly after DreamWorks and Paramount Pictures announced a separation agreement following their failed three-year corporate union. Under that arrangement, Paramount will continue to distribute some DreamWorks productions and has an option to co-finance and co-distribute dozens of other movies at Spielberg’s new company.
The distribution pact with Universal marks a homecoming for Spielberg, who began his career at the studio decades ago with such early hits as “Jaws” and “E.T. the Extraterrestrial” and never gave up his offices on the lot, even after selling DreamWorks to Paramount parent Viacom Inc. in 2006. When Spielberg founded DreamWorks with David Geffen and Jeffrey Katzenberg in 1994, they retained Universal as the international distributor of DreamWorks' movies and worldwide distributor of its home videos. Snider is also a former chairman of Universal Pictures.
This time around, Universal will distribute DreamWorks movies and DVDs in the U.S. and Canada as well as the rest of the world.
As bad as the financial crisis is on Wall Street, there might be a silver lining (albeit a thin one) for southern California's film and TV industry.
The deepening recession is almost certain to put more pressure on states around the nation to slash spending. And that could mean less money alloted for tax breaks and other incentives that have lured scores of films and TV productions away from California, which does not have incentives to keep its homegrown industry here.
"I would imagine the states are going to have to take a hard look at what they're giving away," says Sheri Davis, director of the Inland Empire Film Commission, which coordinates film production in San Bernardino and Riverside. "They are going to have to scale back their incentives because the economy is going to demand that." (Of course, Davis' area could stand to benefit if such state cutbacks keeps production in Southern California and closer to home in Hollywood).
Spurred on by the low U.S. dollar, which has made filming abroad more expensive, states have been trying to outdo each other by offering evermore generous rebates and tax credits to producers. Michigan earlier this year upped the ante with a whopping 42% rebate on all production expenses. Mississippi and Georgia also recently adopted incentive programs, and in April, New York boosted the rebate on below-the-line expenses for qualified productions to 30%, up from 10%. (Los Angeles is still smarting from the move of ABC's "Ugly Betty" to the Big Apple).
But don't expect states to give up so easily, says one film incentive program administrator.
Anthony Wenson, chief operating officer for the Michigan Film Office -- which has attracted more than 60 productions to the state, thanks to its aggressive incentive program -- begs to differ. "We're all concerned right now, but the bottom line is we're optimistic that the program will continue because it has had a real positive impact on the economy."
-- Richard Verrier
Partnering with CBS Corp., YouTube announced on its blog today that it would post full-length episodes of old fan favorites like “MacGyver” and the original “Beverly Hills 90210” along with newer hits like “Dexter” and “Californication” in a bid to bring more advertisers to its highly trafficked site. YouTube is also in talks to add shows from other networks and feature-length films.
Advertisers haven’t always been comfortable linking their products to YouTube content, much of which is user-generated and only a few minutes long, notes Jupiter Research analyst James McQuivey.
For YouTube, that meant running relatively few ads in unobtrusive places for fairly low prices. The site’s revenue is expected to be about $200 million this year, notes Times staffer Jessica Guynn. Google bought the YouTube for $1.65 billion in 2006.
But, McQuivey notes, advertisers aren’t squeamish about old-fashioned TV. “Advertisers understand those shows and are happy to sponsor them,” McQuivey says in an e-mail.
The full-length episodes will include streaming ads sold by CBS, which will share revenue with Google.
Most of YouTube’s rivals in the full-episode space have similarly placed ads. Television episodes aren’t hard to find online, thanks to sites like the NBC Universal and News Corp.-owned Hulu.com, theWB.com -- which resurrects the now-defunct teen-friendly network -- and websites for networks themselves, including CBS.
Better late than never. “YouTube comes at it at a large disadvantage,” McQuivey says. “But it has one thing that no one else has: millions of viewers a day.”
This is YouTube’s first attempt to enter the TV-on-demand game since its Wild West days back in 2006, when users freely posted their recordings of televised content. YouTube fell under harsh lawyerly scrutiny while simultaneously raking in viewers, many of whom came for the bootlegged “Daily Show” but stayed for “Evolution of Dance.” It's still fighting off a billion-dollar lawsuit from Viacom Inc., owner of Paramount Pictures, MTV and Comedy Central, which sued Google claiming copyright infringement.
YouTube, howver, hasn't been all video snippets. The site has featured some longer-form content, like a pre-broadcast second season premiere of “The Tudors” and some independent films.
In July, YouTube viewers watched about 5 billion videos, according to comScore Video Metrix (the world's population is about 6.7 billion). That’s 10 times greater than videos available through runner-up Fox Interactive Media. Hulu came in eighth with 119 million videos watched.
Of course, YouTube viewers go to the site for clips, not shows -- as YouTube product manager Shiva Rajaraman acknowledges. “It’s like walking into two different department stores,” he says. “You have different expectations, and you act differently.”
But, Rajaraman notes, reaction has been positive to previously posted long-form content like “The Tudors,” and full-length videos will bring YouTube closer to becoming a clearinghouse for all forms of video. Also, users might be drawn to YouTube for its comments section, absent from most other online TV streaming sites.
"Participation is merited, and users have an audience for whatever they contribute," Rajaraman says.
For now, only a selection of episodes from each show is available (par for the course for online TV), and they're somewhat hard to find. The episodes aren’t currently hyped on YouTube’s home page (which might explain the relatively low view counts), as YouTube studies its users’ reactions and explores how best to promote full episodes on the site.
Google gained $3.02 or .92% today to $332 in Nasdaq trading.
Photo of David Duchovny in "Californication" courtesy Randy Tepper, Showtime. Photo of the cast of "Beverly Hills 90210" courtesy 20th Century Fox.
In the latest instance of retro pastimes adapting to new technology -- like playing Pacman on Facebook or making pot roast in a microwave -- old media broadcaster Clear Channel is trying to make the leap to the iPhone.
The San Antonio-based radio and billboard giant launched iheartradio, a free application for the iPhone and iPod Touch that will give listeners another shot at hearing "Hotel California" just in case they find themselves out of range from one of Clear Channel's 1,100 radio stations.
The move comes amid what Jim Kerr, a vice president for digital development with the Pollack Media Group, calls a "land rush into the iPhone app space." Clear Channel Radio brings its traditional content -- well-worn songs and all the commercials in between -- to a device already crowded with applications enabling Internet radio listening. Existing applications like FlyCast and RadioTime offer broad selections of terrestrial and Internet radio stations. FlyCast is free, while RadioTime costs $5.99. Internet streaming and recommendation services like Last.fm and Pandora are on the iPhone, too.
Despite the competition, Kerr thinks it's not too late for Clear Channel to get into the iPhone app game. "Whoever gets there first and carves the ground wins," he says.
And it’s not the first time Big Radio has been available off its traditional sliver of airwaves -- Clear Channel has offered content through other cellphones, created podcasts and built specifically branded websites for its stations, with live streams of radio broadcasts and some on-demand tracks. The company has also launched online-only stations like the LGBT-friendly Pride (up-tempo danceable tracks plus relevant news and talk) and the quirkier eRockster. Combined, the station websites bring in more than 10 million unique visitors a month, the company claims, citing a comScore report.
Clear Channel’s latest online effort centralizes all its stations at one site, still in beta testing, called iHeartMusic. Listeners can stream hundreds of stations, selected by location or format. As with the individual sites, some content will be available on-demand, but generally listeners are at the mercy of the programmer.
For now, the iPhone app is a streamlined version of the iHeartMusic website, without on-demand content and with only 10 terrestrial stations -- including L.A.’s KIIS-FM and KFI-AM -- along with eRockster and Pride. Clear Channel plans to add about three to five stations each week, says Evan Harrison, executive vice president of Clear Channel Radio, who notified employees about the application in an e-mail Wednesday.
The lack of flexibility and relatively slim offerings are not necessarily a handicap, says Pollack Media's Kerr. He notes that Clear Channel has the advantage with more passive music fans, who would rather listen to familiar local stations and who aren't necessarily interested in discovering new music themselves.
In a little over 24 hours, Harrison says, iheartradio was downloaded about 5,000 times.
Photo of Evan Harrison courtesy Clear Channel. Photo of radio courtesy baboon (via Flickr, Creative Commons License)
From bobby-soxers to boy-band groupies, teenagers have always been key consumers for the music industry. Only now, instead of counting on them to buy albums with their allowances, labels are happy to have their attention.
Universal Music Group announced today that it would license its music videos to teen social networking site Kiwibox.com, aiming to attract young fans beyond Internet haunts like the youth-friendly but not youth-focused YouTube or MySpace.
For now, Universal is the only label Kiwibox has inked a deal with, though Kiwibox Chief Executive Lin Dai says the other three major labels are "very excited about the possibility of working with us."
It might seem like overkill in a crowded music social-networking field — dominated by the just-launched MySpace Music but well served too by sites such as iMeem and Last.fm. But Dai says a teen-only market is the key advantage Kiwibox offers labels.
"Record labels are trying to reach a targeted teen market," he says, "and that’s a bit hard to do through other social networks where the majority of users aren’t teens anymore."
Kiwibox has 2 million members, 20,000 of whom help produce a weekly online magazine on the site. Dai noted that this peer-edited and -produced content — which has always included music-related features like video interviews with artists and album reviews — will set Kiwibox’s offerings apart from purely user-generated and chronologically organized content on MySpace or YouTube.
Like those sites, Kiwibox aims to add links that will let users purchase tracks, since, Dai says, "teens always see music videos as promotional items."
And airing those videos in a social setting has benefits. A Forrester Research study conducted last year found that over a third of social networkers between the ages of 12 and 17 used the sites to discover music, and 72% of them watched videos online. Other youth-focused sites, including Piczo.com and myYearbook.com, also offer music-related content.
"Providing media in social networks where people are pursuing their lifestyles already is very popular right now," said Forrester Research analyst Jeremiah Owyang.
-- Swati Pandey
Photo: Kiwibox.com Chief Executive Lin Dai. Credit: Kiwibox
With Wall Street in chaos, is it any wonder worried consumers are starting to cut back on discretionary spending?
A new Jupiter Research report found that 32% of online adults say they're cutting back on going to the movies. That's fewer than people who say they're doing less driving (63%), shopping (60%) and vacationing (44%), but nonetheless should sound some alarms in Hollywood.
During the 1991 recession, box office revenue slumped 4.4%, according to Adams Media Research. But people don't always avoid the theater in times of economic unrest. After the Sept. 11, 2001, terrorist attacks, box office revenue actually rose 8.6%; and the immediate aftermath of 1929 stock market collapse sent people to the theaters in droves for a bit of escapism. Box office revenue rose 58.2% in 1929 over the previous year.
But as the hard times dragged on, ticket sales declined. By 1932, box office receipts were off 26.7% from 1931, according to Adams.
And that was before the advent of television, the Internet or video games.
--Dawn C. Chmielewski
PHOTO: Traders working in Wall Street at the beginning of the 1929 stock market crash. OFF/AFP/Getty Image.
There's nothing quite like having a roomful of entertainment-industry movers and shakers to suggest that you're old.
It happened at a PricewaterhouseCoopers Global Entertainment Outlook conference in West Hollywood on Tuesday, when four members of the so-called Net generation trotted onstage to talk media consumption, particularly their wayward Web-surfing habits, before a graying crowd of entertainment-industry-executive types.
Spurred by a moderator and audience members posing queries as if they were anthropologists facing an unknown tribe, the panelists detailed the number of hours they spend online per day (nearly all of them), media content sites they frequent (as one said, "I heart Hulu") and their take on online advertising (make it better).
Asked what effect the financial crisis had on them, one cited the absence of investment-bank recruiters on his UC campus, and two acknowledged budgeting more carefully. One, of course, said that most people he knows "have hardly noticed." (An audience member mumbled that that could be only because he was too young to have a 401[k].)
The demographic bracket bandied about during the conversation, and the one that seemed to apply to all four panelists, was 18 to 25. I ask — having recently skidded out of that demo — whatever happened to 18 to 34? Isn't that whom advertisers really want to reach?
The older half of that broader demo, the panel would have us believe, apparently doesn't watch television online or on cellphones. That glib pronouncement ignored the fact that the next set of panelists — some of whom might have been older than 34 — were behind technology to allow those very trends to evolve, albeit not as quickly as the kids wished.
And sure, most of this is sour grapes from a recently arrived old-timer, but at least MTV agrees with me. The latest study by MTV Networks International's advertising and marketing division, released Tuesday, found that 25-to-34-year-olds are "still actively and emotionally connected to youth culture" but "largely ignored by marketers and advertisers."
Or maybe 27-year-old MTV just knows that it's skidding out of the prime demo too.
-- Swati Pandey
You really know you're in a Depression when "They Shoot Horses, Don't They?" marathons are back.
But this time, it's DVDs. And no Jane Fonda.
In an attempt to get a Guinnes record -- and a life -- Suresh Joachim and Claudia Wavra watched movies for 123 hours, continuously, in a Plexiglas box in New York's Times Square.
The marathon began Thursday with "Iron Man" and ended 57 films later on Tuesday afternoon with "Thelma and Louise," which was personally delivered to the viewing room by Louise, herself, Susan Sarandon, who really doesn't need this kind of publicity.
A representative of Guinness said the record could not be confirmed for about two weeks.
The couple was allowed ten minute breaks between films and was not allowed to fall asleep while watching, which makes it likely that neither "Speed Racer" nor the remake of "The Women" were included.
Joachim, who lives in Canada, claims to have numerous other worthwhile records, including longest time standing on one foot, most bridesmaids at his wedding, longest time rocking in a rocking chair and longest time watching TV, a feat he accomplished on the set of the "Live with Regis and Kelly" show. Really, look it up.
On his website, Joachim says his upcoming feats will include "Elvis singing" for 75 hours.
Photo: Joachim, Louise a/k/a Susan Sarandon, and Wavra (PRNewsFoto/Netflix)
The Academy Awards has often been described as one very long TV commercial for Hollywood. Now Hollywood will be able to squeeze their TV commercials within the TV commercial.
The Academy of Motion Picture Arts and Sciences has lifted its longtime ban on movie commercials during the annual Oscar telecast. The policy was instituted years ago to make sure that TV viewers at home didn't think that "the fix was in," or that studios knew the results of the award categories in advance.
The academy board of governors Tuesday night approved a new policy that will allow each movie distributor an opportunity to buy one 30-second spot in the show, according to Leslie Unger, academy spokeswoman. The ads must be for an upcoming release, not a movie in contention for an award, she says.
Unger says the change was not related to the sluggish economy and forecasts for a slowdown in TV advertising sales. A longtime major sponsor, General Motors, earlier this year pulled out of next year's telecast. "This had absolutely nothing to do with the loss of GM," Unger said. "The show has been selling well."
Last year, Walt Disney Co.'s ABC network, which broadcasts the award show, sold 30-second commercial spots in the telecast for $1.8 million. ABC, according to insiders, lobbied the Academy for years to make the change. The network declines to comment.
-- Meg James
Photo: Motion Picture Academy President Sid Ganis holds Oscar; credit Stephen Shugerman/Getty Images
Newly elected dissidents of the Screen Actors Guild got a lesson in union politics Monday night -- that the guild's welter of procedural rules makes it tough for them to have an immediate impact.
Actors elected under the "Unite for Strength" slate figured they were entitled to some representation on the union's National Executive Committee, composed of the top officers and elected officials within SAG, and which makes key decisions on guild strategy. After all, the dissidents won a majority of the 11 open Hollywood division seats on the national board. But winning a seat on the 71-member national board doesn't qualify the person for a spot on the powerful NEC.
Given their newfound clout, the dissidents sought a voting system that would guarantee them at least two of the 13 seats allotted to the Hollywood division on the NEC. That would give the dissidents, who include actors Amy Brenneman and Adam Arkin, greater ability to achieve their goals of breaking the logjam in contract negotiations with the studios and eventually merging with the smaller actors union, the American Federation of Television & Radio Artists.
But their gambit went nowhere. At a meeting Monday night of the Hollywood board, newly elected board Chair Anne-Marie Johnson, a leader of incumbent group known as Membership First, concluded that the proposal was "out of order." The incumbents summarily elected their members to all 13 seats.
The dissidents, however, will have a chance to assert their influence on Oct. 18, when the national board meets. SAG's negotiating committee has recommended that the board seek a strike authorization vote from members. But don't count on it. The new Hollywood dissidents, along with their allies in New York and the regional branches, haven't reached a consensus, and many are skeptical that a strike authorization vote would be prudent, given the weakened state of the national economy.
-- Richard Verrier
Walt Disney Co. shares tumbled nearly 6% to close at $26.57 a share today after influential media analyst Jessica Reif Cohen of Merrill Lynch downgraded the media company's stock because of concerns about the souring economy.
Disney had been trading at a 20%-to-60% premium to its entertainment industry peers, in part because of what Reif Cohen described as "the highest-quality name" in Hollywood -- something CEO Bob Iger touts as the "Disney difference." Indeed, Reif Cohen expects Disney to continue to defy economic gravity into its fiscal fourth quarter, reporting estimated operating income growth of 7% over the previous year and a 15% rise in net income per share.
"However, this could be the calm before the storm," she warns.
Disney has been the star performer of the large entertainment-company stocks, despite its reliance on revenue from advertising, theme parks and consumer products. That's a credit to the strong management team and the general perception of the brand and its products, Reif Cohen says.
However, she expects operating income to flatten in fiscal 2009, as unemployment rises and consumer confidence erodes. That is likely to hit theme park attendance. (Disney Channel star Miley Cyrus celebrated her 16th birthday at Disneyland in Anaheim on Sunday to promote the new "Celebration Vacation" campaign that begins in January, in which Disney will offer free admission to park attendees on their birthday.)
"Rising unemployment will be the straw that breaks the camel's back," Reif Cohen writes. "We are hard pressed to believe that attendance will not fall in (fiscal) 2009 -- people who don't have jobs simply do not go to Disney World."
Together with advertising and consumer products, roughly 60% of Disney's revenue is susceptible to an economic downturn, Reif Cohen says. Disney's earnings could even fall next fiscal year, despite the strength of the studio's slate over the next two years.
"We think there is significant risk to the stock in the coming months," Reif Cohen concludes.
-- Dawn C. Chmielewski
Photo: "Hannah Montana" star Miley Cyrus is joined by Mickey Mouse as more than 5,000 fans sing "Happy Birthday" to her Sunday, during Cyrus' "Sweet 16" birthday party. Scott Brinegar / Disneyland
The chaos on Wall Street and concern on Main Street are reverberating online.
Netflix Inc., the Los Gatos, Calif., company that provides movies by mail and online, said today that it failed to meet its subscriber growth projections for the third quarter. It also scaled back its estimates for the end of the year.
"Net subscriber growth in July was in line with expectations, but August was unusually weak," Chief Financial Officer Barry McCarthy said in a statement. "In September, the business regained momentum with results slightly below original expectations, likely due to the economic climate."
Michael Pachter, an analyst with Wedbush Morgan Securities, said although the Olympics may have drawn away some viewers in August, consumers appear to be reacting to news of bank failures and the credit crisis.
"The average consumer couldn't help but be scared in the month of September, with all that’s going on," Pachter said. "Even though Netflix is a very low-cost way to watch movies, it’s still hard to commit (to a monthly subscription) if you’re not absolutely secure you're going to have an income, have a job."
Netflix said it ended the third quarter with about 8.672 million subscribers, below its previous guidance of 8.675 million to 8.875 million subscribers. That nonetheless represents a 23% gain from the same time last year, when it had a little over 7 million subscribers. The company expects to end the year with 8.95 to 9.25 million subscribers, down from earlier estimates of 9.1 to 9.7 million.
Net income is expected to be comfortably within the company's previous guidance of $16 million to $21 million, or earnings per share of 26 cents to 34 cents.
-- Dawn C. Chmielewski
Photo credit: Paul Sakuma / Associated Press
The long arm of Tom Short continues to reach its way across the International Alliance of Theatrical Stage Employees, even though he retired from the labor organization several months ago.
In one of his last acts before stepping down in July as president of IATSE, the powerful union chief attempted to push through the merger of two locals representing illustrators and set designers with the larger Art Directors Guild, known as Local 800.
Short argued a merger would strengthen the clout of the individual guilds and limit turf battles. Known as much for his old-school, autocratic style as his tireless organizing, Short finally got his wish last week when staff members from the two smaller locals -- Local 790 (illustrators and matte artists) and Local 847 (set designers and model makers) -- cleared out their desks in Sherman Oaks and moved into the ADG offices in Studio City.
But the shotgun merger has angered the smaller locals, whose members voted down the idea at a meeting in May, fearing they would lose their autonomy and be forced to join a union dominated by people who act as their supervisors. The ADG has 1,500 members, versus about 500 in the others.
Suspicions and rivalries run deep between illustrators and set designers, and the art directors to whom they report. All three jobs work in close collaboration with one another but zealously guard their highly specific functions. Illustators draw scenes of movies and TV shows before they are filmed. Set designers create blueprints of the sets from those illustrations. And art directors oversee the entire process. For years, illustrators have complained about art directors taking credit for their work and hiring non-union artists. And set designers have groused that assistant art directors are taking over their jobs.
Spurred by such fears, illustrators and set designers banded together to fight the plan. They filed a lawsuit to block the merger. But last month a judge cleared the way, subject to the outcome of an appeal of a ruling by the National Labor Relations Board. The NLRB had dismissed a complaint from the locals that the merger was improper. (The IATSE has filed its own lawsuit against the locals, alleging that the merger was necessary because changing technology had blurred the lines between the crafts.)
“This was [Short’s] last hurrah to get us into another local,” says Gary Speckman, a board member with Local 847. “We didn’t want to be pushed into it.”
Joseph Musso, president of Local 790, says art directors wanted to “dominate us so they can do whatever they want.”
The veteran illustrator, who has worked on "Flags of Our Fathers" and "The Italian Job," says dissolving the locals was a “vendetta from Short” in response to a complaint Musso lodged in 2000 that IATSE was not investigating grievances Musso and another illustrator had about an art director taking credit for their work. Short said the dispute was a non-union matter better left to the courts. After Musso questioned Short's decision, the union chief rebuked him for taking his complaints to a Hollywood trade paper, and vowed to press head with a merger of the unions.
An IATSE spokesman said Short wasn't available for comment. Art Directors Guild Executive Director Scott Roth says, “It’s a sensitive time, but we’re moving in the right direction to effectuate the merger.” He declines to elaborate.
-- Richard Verrier
Photo: Tom Short, courtesy of I.A.T.S.E.
Is Condoleezza Rice handy? Tensions are rising in Hollywood. This week, high-level negotiations have been underway to defuse a volatile situation: Who is important enough to take the stage during the television industry's upcoming annual "presidents luncheon."
The gathering is hosted by the Hollywood Radio & Television Society, an institution that has been around so long (since Harry S. Truman was president) that radio still gets top billing in the organization's name. Originally scheduled for Oct. 29, the luncheon typically involves debate -- and a healthy dollop of ribbing -- among the entertainment chiefs of ABC, CBS, NBC, Fox and the CW. Now the date, and even the participants, are in doubt.
The issue: whether NBC Entertainment co-Chairman Ben Silverman, who represented NBC last year, will attend, and if co-Chairman Marc Graboff instead will appear; or if NBC's chair on the stage would be conspicuously unoccupied. Silverman and Graboff, according to three people familiar with negotiations, have said that they would not participate. Reason: technically, they are chairmen with more duties -- not presidents -- and a chairman is a notch above president.
Last year, more than 1,000 people in the industry attended the luncheon, with many (well, most) hoping to see fireworks between ABC Entertainment President Steve McPherson and Silverman. McPherson was steamed that NBC a few months earlier had unceremoniously eliminated the job of his good friend, Kevin Reilly, to make room for Silverman. McPherson was incredulous that Silverman had told journalists that he wasn't to blame for Reilly losing his job. In fact, Silverman had been interviewing for the top programming job at NBC, which encompassed Reilly's duties. During the summer press tour, McPherson challenged Silverman to "be a man."
But the overflow crowd at last year's luncheon was disappointed. There were no bottle rockets, but there were some memorable digging. Director/Producer Barry Sonnenfeld, the panel moderator, asked the entertainment chiefs from CBS and the CW whether their Big Boss, CBS Corp. Chief Executive Leslie Moonves, has "ever threatened to kill one of you?" (No, they said.) Silverman attempted to make light of his party-boy reputation by saying that when other network executives were home with their families, he was out "dating their kids." To which Reilly, who had just been installed as Fox's entertainment president, replied, "I have boys." The crowd roared.
No wonder Silverman doesn't want to participate this year. And there could be another reason. His tumultuous 16-month tenure at NBC so far hasn't ushered in the turnaround the network had hoped. By skipping the event, Silverman won't face embarrassing questions.
This is not about dodging questions, according to two people familiar with NBC's position. NBC told HRTS that it would send its top programming executive, Teri Weinberg, on behalf of NBC. She has nearly the same duties as most of the other panelists and is the "appropriate" representative, according to the two people.
No way, say the other networks and HRTS. Adopting NBC's own argument about rank and title, they said Weinberg isn't a president and thus doesn't belong on the stage. NBC got miffed, and saying they weren't about to let HRTS dictate who they sent to the panel.
HRTS says they will announce the event when they've nailed down the participants.
-- Meg James
Photos: Ben Silverman (Credit: Stephen Shugerm / Getty Images); Steve McPherson (Credit: Donna Svennevik / ABC); Kevin Reilly (Credit: Michael Buckner / Getty Images)
UPDATE: Matt Johnson, attorney for Perry, said the writers were terminated for the "quality of their work" and accused the guild of misrepresenting the facts and negotiating in bad faith with the company.
Tyler Perry, whose films embody messages of hope for people trying to improve their lives, draws the line at writers.
At least that's the view of the Writers Guild of America, West. The guild announced late Thursday that it had filed unfair labor practice charges with the National Labor Relations Board, alleging that mini-mogul Perry had unlawfully fired four writers on the cable TV series for trying to get a union contract.
The guild has tried for months to negotiate a contract covering writers on the TBS sitcom and another Tyler series, "Meet the Browns," on USA. But those efforts broke down Tuesday, the guild said, when director/producer/playwright/actor Perry fired the writers after warning them that they could be replaced if they continued to angle for a guild contract.
Not prone to shirking from a fight -- or a photo op -- the Writers Guild now plans to stage a "strike action" against Perry's production company during Saturday's opening ceremonies of his new studio facility in Atlanta. Perry could not be reached be reached for comment.
Since ending its 100-day strike in February, the Writers Guild has continued to take an aggressive stand in organizing reality TV shows, such as "American Idol" and various basic cable series like "House of Payne." The union has signed up several shows on Comedy Central in recent months.
-- Richard Verrier
Photo: Tyler Perry Credit: Stefano Paltera / Los Angeles Times
The consolidation sweeping Hollywood smaller movie operations continues ... Fox Walden, the 2-year-old marketing partnership between 20th Century Fox and billionaire Phil Anschutz's Walden Media, is downsizing after a string of disappointing releases, including "The Seeker," "Mr. Magorium's Emporium" and "Nim's Island." As many as 12 people will lose their jobs as a result of the belt-tightening, according to a person close to the company. Fox and Walden decided that it wasn't cost effective to operate a separate marketing unit for their joint-venture films. About three Fox Walden employees will be absorbed into Walden. Jeffrey Godsick, who is head of the unit, will rejoin Fox as executive vice president of marketing and digital content and continue to oversee Fox Walden, which will now handle fewer releases a year than orginally planned.
What are the chances that Sumner Redstone will sell Viacom Inc.'s Paramount Pictures?
Zip. But one Wall Street analyst, Rich Greenfield of Pali Reserach, thinks it's a good idea and is urging the octogenarian media mogul to unload the historic studio.
"Paramount has become Sumner Redstone's 'sports team,' " Greenfield wrote in a report today. While Paramount is profitable, he writes that the studio's "annual cash flow drives a valuation that is well below its private market value." Greenfield estimates that the studio's film library generates "at least" $400 million to $500 milllion annually, "implying" that Paramount would be worth $4 billion to $5 billion to a buyer. But that value, Greenfield attests, is not reflected in parent Viacom Inc.'s stock price.
It's not every day that a Wall Street analyst brazenly challenges one of the media companies he covers, and Greenfield wasn't mincing words in his report. "Investors increasingly loathe Viacom due to a nearly non-existent management team (with no access to anyone involved in operations), who have done a poor job explaining why they are underperforming peers in advertising sales growth, as well as failing to provide a clear understanding of the timing and potential scale of revenues and profits from its emerging video game business," Greenfield writes.
Not surprisingly then, Greenfield cut his 2008 EPS estimate for Viacom to $2.65 per share from $2.69 per share and knocked down his price target to $40 from $51. He shaved his 2009 EPS estimate a penny to $2.92 per share, but nonetheless reiterated his "buy" recommendation, noting the stock remains undervalued.
Greenfield believes that the recent turnaround at Paramount Pictures -- thanks to such hits as Marvel's "Iron Man" and Steven Spielberg's and George Lucas' "Indiana Jones and the Kingdom of the Crystal Skull," has had very little positive impact on Viacom's stock -- and suggests Time Warner Inc., which owns Warner Bros., would make a good home for the studio, especially since "it has stated its desire to expand its content business."
That seems a bit of a stretch. While Time Warner did try to buy MGM a few years back for its film library, it's hard to imagine that in this market the media giant that recently put New Line out of business as a full-fledged studio, and closed its two specialty film labels, would consider buying another major.
Regardless, it doesn't make any difference. The feisty 85-year-old Redstone, who ferociously fought Barry Diller in a bidding war for the studio in 1993, is not about to let it go -- even though he recognizes making and distributing movies is a shrinking, low-return and volatile business.
Even Greenfield admits that he's proposing an unlikely scenario. "Sumner sees this as an important trophy asset," he said in a telephone interview.
So what does Sumner have to say to Greenfield?
He wouldn't get on the phone to answer the question, but his aide-de-camp Carl Folta scoffs at the possibility: "The notion that we would or should sell Paramount is absurd."
-- Claudia Eller
Photo: Paramount (Anne Cusack/Los Angeles Times); Redstone (Chris Pizzello/Associated Press)
The band gave its cultish followers something to swoon over today — a fairly cheap-seats three-night reunion — and something to (potentially) whine about — no resales on tickets sold through the band's site, with the risk of being turned away at the gates for showing up with a scalped stub, as Ticket News reported.
The announcement came the same day Ticketmaster-owned TicketsNow officially launched a service that makes it easy for individuals to resell their tickets. The site, formerly dominated by brokers, follows the model of other resellers by promising authentic tickets, handling buyer-seller communication, offering prepaid shipping labels, and pocketing a 15% commission from the seller on each ticket sold. (It's more upfront about the fee than some rivals, making sure sellers see it before they begin the ticket-posting process.)
On the similarities, StubHub spokesman Sean Pate says that this is old hat for his company.
“StubHub revolutionized the ticket market eight years ago by offering this level of service,” he notes in an e-mail.
The one thing it doesn’t have so far is a last-minute selling option for individuals. TicketsNow sellers have to have enough time to FedEx tickets to the buyer, so the sale ends well before the show. StubHub, which leads the secondary ticket sale market, can keep sales going until just before showtime, as long as a seller has mailed the tickets to StubHub in advance.
Ticketmaster acquired TicketsNow in February, and has said the company helped boost Ticketmaster revenue by 30% in the quarter ended June 30, to $382.4 million from $293.4 million. Ticketmaster purchased the company for $265 million, which is $45 million less than eBay paid for the larger StubHub in 2007.
And although Ticketmaster may have once been the biggest critic of reselling tickets — pursuing legislation to restrict brokers who sought big profits, among other efforts — it’s now playing the game.
But it still allows artists who may want to restrict resales to do so. AC/DC made select fan-club tickets for its upcoming tour “paperless,” which is less about being green than about keeping others from making green, whether for the sake of preventing fans from being priced out of up-close seats, or for the sake of keeping band-unaffiliated resellers from making big bucks, or both. Tom Waits and Metallica have used the technology too.
Photo: Trey Anastasio of Phish. Credit : Ken Hively / Los Angeles Times
Recognizing a key shift in the balance of power in the Screen Actors Guild, the union's negotiating committee late Wednesday recommended to the guild's national board that it obtain a strike authorization from members.
Although the negotiating committee had the authority to call such a strike vote on its own, the group decided to defer the delicate matter to the board. The 71-member board's composition changed last month after a group of dissidents won key seats, potentially putting the union on a more moderate course.
The recommendation comes two days after the studios summarily rejected a call by SAG leaders to resume formal bargaining, which ended in early July.
The new board will take up the issue Oct. 18, but it's not clear whether the newly elected directors will have enough clout to oppose a strike authorization.
-- Richard Verrier
Since everyone appears to be getting a hand from the government these days, why leave Hollywood out of the picture?
The proposed $700-billion bailout package includes some unexpected sweeteners for the movie and TV industry, which will get two tax breaks worth more than $450 million over the next decade for producers who shoot in the U.S. That's not a lot of money given that the average studio movie costs $106.6 million to make and market, but it could keep some low-budget productions from going offshore.
Hollywood union and industry groups have long pushed for measures to curb so-called runaway production, which has caused thousands of job losses in Southern California over the last decade as filmmakers have gone to Canada and other foreign countries that offer lucrative tax breaks.
One provision would allow film and TV producers to get the same tax deductions American manufacturers such as General Motors Corp., Boeing Co. and Xerox Corp. get for making their products in the U.S. The legislation would allow filmmakers to qualify for a 32% top tax rate, instead of 35%.
Additionally, the tax package lifts the budget cap on the existing tax deduction, which was limited to movies that cost less than $15 million to make -- in effect excluding most studio films, which cost a whole lot more. Now producers would be able to immediately deduct all production costs up to $15 million, regardless of the movie's total budget. The change also extends the existing credit, which was due to expire this year, to December 2009.
The measures were part of a broad tax extension bill recently approved by the Senate that was folded into the bailout legislation.
-- Richard Verrier
The Los Gatos company struck a deal with premium movie service Starz Entertainment that will allow Netflix subscribers to watch such mainstream movies as "Spider-Man 3," "Ratatouille, "No Country for Old Men" and "Superbad" on demand online.
The agreement represents a milestone for Netflix, whose online film offerings have, until this point, been limited to what would be charitably described as "niche" offerings, heavy on sophomoric humor ("National Lampoon's Pledge This!"), horror ("BloodRayne II: Deliverance") and art-house fare ("My Summer of Love").
That's because the premium cable services -- HBO, Showtime and Starz -- pay big money to lock the rights to distribute Hollywood movies, once they've left theaters and been released on DVD. These contracts keep recent releases off fledgling Internet movie services once they enter this exclusivity period, known as the pay-TV window.
"We have 100,00 movies on DVD and 12,000 movies to stream," said Netflix Chief Content Officer Ted Sarandos, noting the disparity between the company's physical and digital catalogs. "The biggest gap is television exclusivity."
The Starz agreement helps to narrow that gap. Netflix subscribers who have unlimited plans, which start at $8.99 a month, gain access to the 2,500 movies and other video offerings from Starz as part of the package.
"This solves a huge problem for Netflix, because so much of the criticism about the instant-watch feature is it's just cruddy content," said Kurt Scherf, vice president and principal analyst for researcher Parks Associates.
The streamed Hollywood offerings, however, are limited to two major studios: Walt Disney Studios and Sony Pictures. Netflix's online service won't have access to movies from Warner Bros., Fox, Paramount or Universal because they have deals with other cable services.
Now that the studios have rebuffed an offer from the Screen Actors Guild to resume formal negotiations, expect things to get ugly fast.
The union's negotiating committee will decide Wednesday whether to seek strike authorization from members should SAG and the studios reach an official impasse -- or defer that decision to the national board. The board meets Oct. 18.
Strike referendums require approval by 75% of voting members. That may be hard to achieve given the dire economy. But a majority of negotiating-committee members believe SAG has few remaining options, short of capitulating on key demands over new-media pay, guild insiders say.
The national board already gave the negotiating committee authority to seek a strike vote. However, the board could still vote to disband the committee, given the election of new directors who challenged the guild's leadership.
-- Richard Verrier
NBC Universal announced today that Linda Sullivan, general manager of Channel 4 in Los Angeles for a mere 16 months, was retiring. Sullivan had spent 32 years in the television business in such markets as Boston, Providence, R.I., Washington and the Bay Area. She worked nearly 13 years for NBC and joined KNBC in May 2007, replacing longtime GM Paula Madison.
"When I first came to KNBC, someone from one of the employee groups told me that "the worst day here is still better than the best day anyplace else," Sullivan said in a brief phone interview late today. "This is a decision that I didn't reach lightly." She said plans for her retirement had been in the works for a while.
Sullivan plans to return to Boston, where her husband, Charles, lives.
NBC Universal immediately announced that Craig Robinson, KNBC's executive vice president for operations and digital strategy, would become acting GM "until a formal replacement for Sullivan is announced."
The weakening economy has clouded the financial outlook for TV stations, making businesses that were once described as licenses to print money much tougher to manage. Last week, NBC Universal Chief Executive Jeff Zucker said that revenue at TV stations, which are highly dependent on local auto and retail advertising, have been battered. National advertising so far has weathered the storm, Zucker added, but the economic downturn has had a "profound effect on our local television stations."
-- Meg James
Pictured: KNBC-TV Channel 4 anchors Colleen Williams, Fritz Coleman, Fred Roggin and Paul Moyer. Credit: NBC Universal
The Senate passed the Webcaster Settlement Act — approved by the House over the weekend — to give webcasters more time to negotiate royalty rates that won't put them out of business. The bill sped through Congress after being introduced last week, and it now awaits President Bush's signature.
Webcasters — from major broadcast radio outlets like NPR to online-only operations like Pandora — have been searching for alternatives since the Copyright Royalty Board created a new royalty rate scheme last March. The board eliminated the option that small webcasters once had of paying a percentage of their revenue rather than a per-play rate, and instituted a minimum charge of $500 per channel. The board also raised the .08-cent-per-play rate so that it would more than double by 2010, amounting to a few cents per listener per hour, which advertising would be hard pressed to sustain. For some webcasters, the royalties they would owe total more than their revenues, notes BRS Media analyst George Bundy.
Since last year, webcasters have lobbied Congress, gone to court, and asked listeners to call their representatives to try to roll back the ruling. Some were sympathetic. Rep. Jay Inslee (D-Wash.), whose district includes Redmond, where Microsoft is based, and who introduced the bill that passed this weekend, offered a proposal that would have reversed the board’s ruling and decreased existing royalty rates, but it didn’t stick.
The bill isn’t quite the reversal some webcasters might have wanted, but it does give them a couple of extra months to negotiate a deal with SoundExchange, the nonprofit organization in charge of collecting fees for artists and record labels. SoundExchange joined with the Digital Media Association, NPR, and the Recording Industry Association of America to support the bill.
“We are very hopeful of reaching agreement soon, and thereby creating long-term stability that will re-energize the Internet radio business,” said DiMA Executive Director Jonathan Potter in a statement.
But Bundy wasn't entirely optimistic about the talks.
“It’s really difficult to tell whether the extension will allow enough time for both parties to realistically come to a deal,” Bundy says. “What we’ve seen in the past is that there isn’t much hope of getting something together without mediation.”
Photo: Rep. Jay Inslee. Credit: Nathan Bilow / Associated Press
Pakman announced his resignation from EMusic yesterday and today blogged about his unflagging confidence in the business of subscription downloads, saying that “our success cannot be understated.” He notes that EMusic has increased its subscribers fivefold — to 400,000 — and its revenues tenfold, to $70 million, in the five years since Vivendi Universal sold it to New York-based investment firm Dimensional Associates Inc.
The company has made those leaps without the benefit of deals with major labels — which avoided EMusic because it lets users download tracks in the universally usable mp3 format, even though the big labels have since teamed with Amazon and even iTunes to sell mp3s. Still, EMusic has managed to carve out a niche for avid indie music consumers, the kind who buy several albums a month and for whom paying a flat fee (as low as $11.99) is a steal.
And eMusic still sees strong potential for growth. Chairman Danny Stein said in a statement that the company expects its next chief — probably an outside hire recruited by the executive search firm Barlow Group with input from Pakman — to raise revenue to the several-hundred-million-dollar range.
While EMusic wouldn’t comment on how that would happen, the company has been giving its website a makeover, incorporating photos and information from sites like Wikipedia and Flickr. It’s also plotting to put out over coming months a new welcome page — its current one walls off content from nonsubscribers — and a recommendation engine.
Those changes should help the company burnish its image as a clearinghouse for all things indie, a specialization that may continue to pay off if — as the also CEO-less MySpace Music seems to be doing so far — other streaming, subscription and download sites stick to pushing mostly major label content.
Logo courtesy EMusic
First it was Louisiana. Then it was New Mexico and New York. Now it’s Michigan’s turn as the latest hot spot for film production. Not since Michael Moore’s documentary “Roger and Me” has the Great Lakes state garnered so much attention from Hollywood.
Once considered a relative backwater as a film destination, Michigan has lured more than 60 features and made-for-TV movies this year, up from just three last year, according to the Michigan Film Office. The projects include upcoming films as well as recently-wrapped movies such as Clint Eastwood’s "Gran Torino," a drama about at Korean War vet who befriends his young neighbor; "Whip It!," a Drew Barrymore-directed comedy starring Ellen Page of "Juno" fame; and the sci-fi thriller "Butterfly Effect: Revelation" (pictured above). Twentieth Century Fox, Warner Bros. and Sony Pictures all have films lined up to shoot in Michigan this fall.
Under Michigan's program, producers get 40 cents back for every $1 they spend on filming (double the existing rebate) and qualify for an additional 2% spending rebate if the film is shot in designated "core communities," including Detroit and Flint.
The rebate covers salaries of crew members and above-the-line talent up to $2 million per person (so that wouldn't cover the typical fees commanded by the likes of a Brad Pitt or a George Clooney). Additionally, the new law provides a 25% tax credit for companies that invest in new film and digital media studios in the state and would cover 50% of on-the-job training expenses for Michigan residents working as crew members.
Thanks to such incentives, Michigan expects to pull in nearly $400 million in film revenues this year, a welcome boost to a state that has been buffeted by the woes of the Big Three auto makers. “The response has been magnificent," says Anthony Wenson, chief operating officer for the Michigan Film Office. “We’ve not only brought dollars into the state, but we’ve created new jobs.”
How long Michigan enjoys its moment in the sun -- yes, there's sun in Michigan -- remains to be seen. The state doesn’t have the quantity of crews or the production facilities of more established locales such as Vancouver, Canada, and New York. And, of course, there's nothing to stop another state from coming along and cooking up even more generous incentives.
But for now, Michigan’s success is a stark reminder of California’s continued vulnerability to runaway production. Much to the lament of unions and industry officials, California does not have an incentive program to keep its signature industry at home. This, despite having a former movie star in Gov. Arnold Schwarzenegger.
-- Richard Verrier
Photo: On the set of "Butterfly Effect: Revelation." Credit; David McIlroy
UPDATE: The studios late Monday finally responded. In a statement, the Alliance of Motion Picture and Television Producers, rebuffed the offer. "We do not believe it would be productive to resume negotiations at this time given SAG's continued insistence in terms which the companies have repeatedly rejected."
Screen Actors Guild to the Alliance of Motion Picture and Television Producers: Let's talk
In an effort to jump-start stalled contract negotiations with the studios, SAG President Alan Rosenberg and Executive Director Doug Allen called on News Corp. President Peter Chernin and Walt Disney Co. President Bob Iger to revive formal bargaining.
It came on the same day that the stock market plummeted as the House of Representatives turned down the Bush administration's Wall Street bailout plan.
In their letter, which was also addressed to the studios' chief negotiator, J. Nicholas Counter III, the union leaders said it was futile to send the studios' "final offer" to members, and they alluded to a poll in which fewer than 10,000 members urged their leaders to reject the proposed contract and instead "fight" for a better deal.
"It is our fervent hope that this news will encourage you and your colleagues to reengage in formal bargaining, with the exchange of proposals and compromise by both sides necessary to reach agreement."
They added: "We owe it to our constituencies and the thousands of others in this industry that depend on a productive, stable and uninterrupted relationship between the Screen Actors Guild and the networks and the studios. ... What do you say; when can our committees meet face-to-face?"
Actors have been without a contract since June 30. The two sides are sharply at odds over how actors are paid when their work is distributed over the Internet.
Although expressing a willingness to compromise, the SAG leaders also warned that "if your intransigence continues, however, our choices become harder and fewer."
There was no immediate response from the studio executives or the Alliance of Motion Picture and Television Producers. Don't hold your breath. The AMPTP dismissed results of SAG's recent poll as unrepresentative because of the low response rate, and it has also accused guild leaders of misleading their members into thinking they were engaged in informal negotiations with the studios. The studios have shown little willingness to improve on a contract modeled on a similar deals already negotiated by writers, directors and the smaller actors union, the American Federation of Television and Radio Artists.
As the producer of the highly profitable "Spider-Man" franchise, Laura Ziskin has helped make Sony Pictures zillions over the last six years from the three superhero movies that amassed $2.5 billion in worldwide ticket sales, not to mention tens of millions more in DVD, merchandising and television proceeds.
But when Ziskin asked Sony to contribute money to her Stand Up to Cancer fundraiser, her home studio turned down her pitch. If Major League Baseball could pitch in $10 million, surely Sony along with the other Hollywood studios could collectively match that, figured Ziskin, herself a breast cancer survivor.
"We hoped that because we were an entertainment industry endeavor that the studios would have made a big financial donation, but they didn't," says Ziskin, who worked for more than a year with a group of women that included CBS News anchor Katie Couric and former Paramount Pictures chief Sherry Lansing to pull off a star-studded one-hour prime-time telethon with Meryl Streep, Jack Black, James Taylor, Lance Armstrong and other celebs that was simultaneously broadcast Sept. 5 by ABC, NBC and CBS.
In the show's early planning stages, Ziskin met with Sony Pictures Entertainment Chairman Michael Lynton and movie boss Amy Pascal to ask if the studio could provide her with technical support and manpower. No problema, they said. But, when it came to her request for Sony to write a check to the charity -- problema.
"The studio chose not to give money, but we tried to be as helpful as we could by giving Laura office space and all the technical support she needed to make the event successful," Lynton said when asked about the incident.
So, let's get this straight. The studio that just announced that it hopes to make two more "Spider-Man" sequels, which will easily cost more than $500 million in production costs, can't spare a cool couple million for a worthy cause?
Though disappointed, Ziskin says she was very grateful that Sony "supported me totally in the endeavor," giving her not only offices, camera equipment and other in-kind contributions including support in helping build the charity's website, but also time off from making movies for a year to put the show together. "That was no small thing," she says.
Does flashing some cash turn a geriatric network into an Internet hipster?
Apparently, it does for Leslie Moonves (pictured), chief executive officer of CBS Corp. He told the Internet Advertising Bureau's annual conference that his company's $1.8-billion acquisition of CNET Networks instantly transformed the company into a "major player" in the digital realm.
The deal combined such CNET properties as GameSpot.com, TV.com and Search.com with CBS' other online holdings and catapulted CBS to a Top 10 Internet property, according to ComScore Media Metrics, which measures online audiences.
But if size were all that mattered online, behemoths like Time Warner's AOL -- the fourth-most popular website -- wouldn't be smearing on the lipstick and parading its assets for a sale.
Nor has "traffic" proved the winning formula for the Internet's second-most popular site, Yahoo, notes tech commentator Michael S. Malone, who said the crazy price paid for CNET should send other Internet companies on the hunt for some "East Coast sugar daddy."
"Scale is only half the equation, and arguably the half that doesn't matter," says Scott Ehrlich of DigWorks, a digital media consultancy. "More important is: Do you know how to take advantage of scale?"
Some, including popular venture capital blogger GigaOM's Om Malik, praises Moonves' acquisition as a big, bold bet.
"He's got table stakes now," said Mike McGuire, vice president of media research for Gartner. "The challenge comes in how you deploy and utilize those assets."
It'll take more than a merger-and-acquisition strategy, though, to realize Moonves' dream of turning CBS' scattered online assets into a one-stop shop for news and information. Moonves is already savoring that day, whose advantages would include "taking money away from the newspapers."
Or, he could have added, radio, local and network television: the core of CBS' businesses.
-- Dawn C. Chmielewski
Photo: John Paul Filo / CBS
Heidi is having a bad week. First William Shatner rips her clothes off, then Tom Bergeron drops her on the floor, and now this!
A New York judge on Friday clipped the wings of "Project Runway," by issuing a temporary injunction that prevents the producers from moving the popular cable TV show to Lifetime Networks from Bravo. NBC claimed that Weinstein breached their contract by not giving it right of first refusal before jumping the show to another company.
Earlier this year, show producer Harvey Weinstein negotiated a deal to move the show, hosted by Heidi Klum, to Lifetime Networks. NBC Universal, which owns Bravo, and which has been home to the show for five seasons, immediately sued Weinstein to block the move.
"NBC Universal is pleased that the court granted our motion for a preliminary injunction against The Weinstein Company," said NBC in a statement. "The overwhelming evidence demonstrated that The Weinstein Company violated NBC Universal's right of first refusal to future cycles of 'Project Runway.'
Lifetime, in a statement, said it was "disappointed with the court's decision," noting that the show's "loyal fans" are the "people hurt most by this ongoing dispute." The cable network avers it will "pursue all measures to uphold its valid and binding agreements" with Weinstein.
-- Meg James
Photo: Richard Drew/AP
Artists on indie labels flocked to MySpace early on because it offered an easy and free alternative to slick personal websites built by major label Internet whizzes. Their participation made MySpace a destination for music lovers, who could listen to songs and check tour dates for artists even if they didn't have a MySpace profile.
The new MySpace Music offers a far vaster collection of songs for streaming and slapping on personalized playlists. The site, controlled by News Corp., is banking on that collection to draw more users and plays. In exchange for ponying up their stars' oeuvres, major record labels received ad-revenue sharing deals and equity stakes amounting to 40% of the MySpace venture, as The Times reported.
But indies -- whose artists are still attracting traffic to MySpace with their profiles and selection of streaming and embeddable songs -- received no equity. And, indies say, major labels will reap the benefits of MySpace's growth, even if it's driven in part by independents.
"Our lovers were cheating on us," says Tom Silverman, founder and chief executive of Tommy Boy Records. "Now we need to hire a great divorce lawyer."
In other words, negotiations to get indies their share are continuing.
The summer popcorn movie season ended weeks ago. Or did it?
DreamWorks/Paramount’s “Eagle Eye,” a techno-thriller starring Shia LaBeouf, could reap the first opening-weekend gross above $30 million since early August, when “The Mummy: Curse of the Crystal Dragon Whatever” came out.
Domestic box-office revenue has been down for eight of the last nine weekends, but the PG-13-rated “Eagle Eye,” opening at 3,510 theaters including 86 Imax locations, might help Hollywood snap out of its funk.
Produced for a little over $80 million, the race-against-time thriller is pulling from all demographics in consumer tracking and figures to easily outsell today’s other major releases, “Nights in Rodanthe” and “Miracle at St. Anna.”
“Rodanthe,” as expected, is tracking well with women: In the Projector household, for example, 100% of females over 25 want to see it. Expect an opening in the $10-million vicinity.
The R-rated “St. Anna,” however, has soft tracking, equally mixed reviews and a relatively small screen count, at 1,185 theaters, so a mid-single-digit launch looks likely.
Wall Street's getting help. U.S. manufacturers have gotten a hand. Now Hollywood would like a little love from Washington, too.
A coalition of unions and industry-backed groups are putting aside their differences in an effort to tackle the long-standing problem of runaway production, which has drained thousands of film jobs from the Southern California economy. Members of the unlikely alliance -- politics makes interesting bedfellows -- are pressing lawmakers for some tax breaks that they say will keep film and TV production in the U.S.
Included in a broad tax-extension bill on Tuesday was a provision that would allow film and TV producers to get the same tax deductions American manufacturers such as General Motors, Boeing and Xerox receive for making their products in the U.S. Currently, the big Hollywood studios don't benefit from the provision because the deduction does not apply to short-term workers, who make up the bulk of a movie's payroll. The proposed change to the tax code would allow producers to deduct the wages paid to full-time as well as short-term workers for domestically produced films and TV shows.
"Our tax laws have helped push American film production abroad," said Sen. Dianne Feinstein (D-Calif.), who supported the measure, in a statement. "This legislation will help level the playing field."
Additionally, the tax package removes the budget cap on the existing tax credit, which was limited to movies that cost less than $15 million to make -- effectively excluding most studio films, which cost an average of $70.8 million, according to Hollywood's trade and lobbying arm, the Motion Picture Assn. of America. The change would allow producers to immediately deduct all production costs up to $15 million.
"We certainly believe a federal incentive will only complement all the state incentives we have in place to bring productions back to the U.S." said Pamm Fair, deputy national executive director for the Screen Actors Guild, which has joined the Directors Guild of America, other unions and industry groups including the Independent Film and Television Alliance in lobbying for improved tax credits.
The tax bill, which has been passed by the Senate, still needs to be approved by the House and signed by the president in order to become law. Given the current financial crisis, however, Hollywood may have to wait a little longer for the sweeteners.
-- Richard Verrier
Photo: Chip Somodevilla / Getty Images
The recording industry’s first major victory in its lawsuit campaign against file-sharing was called into question today over the meaning of the word “distribution.”
U.S. District Judge Michael J. Davis granted a new trial to single mother Jammie Thomas of Minnesota, convicted last October of copyright infringement and ordered to pay a whopping $222,000 to record labels for 24 songs she served up on file-sharing site Kazaa. (For those of you doing the math, that’s $9,250 a song, or the equivalent of 925 albums and a few spare tracks on iTunes.)
Thomas quickly appealed that ruling by claiming that the punishment was disproportionate to the crime. Indeed, the Recording Industry Assn. of America’s lawsuit campaign relies on confronting accused infringers with huge potential fines while angling for more reasonable settlements and for a deterrent effect on other would-be file-sharers. The RIAA has reportedly sued and settled with more than 30,000 people, but Thomas was the first infringer to go to trial.
But in May, Davis suggested that a new trial could be granted because of an error he made in jury instructions. In the original case, Davis told the jury that the Brainerd, Minn., resident could be liable for simply making the songs available on Kazaa — regardless of whether anyone actually downloaded them.
Now, Davis has ruled that his instructions contradicted a 1993 ruling, which would have required the record labels to prove that somebody actually downloaded Thomas’ songs, without which Thomas couldn’t be said to have distributed the tracks.
Of course, whether the RIAA’s investigators, who downloaded the songs, count as that “somebody” remains to be seen.
“If we all left our CDs on the front lawn and no one ever took one, how is that a problem?” asks Fred von Lohmann, senior staff attorney with the Electronic Frontier Foundation, a digital rights advocacy group. “The recording industry now has to actually prove its case. They have to prove that distribution actually happened.”
RIAA spokesman Jonathan Lamy says that won't be a problem. “As with all our illegal downloading cases, we have evidence of actual distribution,” he wrote in an e-mail.
And although his ruling’s relied on the jury instruction error, Davis also commented on the size of Thomas’ fine.
“[S]tatutory damages awards of hundreds of thousands of dollars is certainly far greater than necessary to accomplish Congress’ goal of deterrence,” Davis writes, calling it a “farce” that a single mother’s non-commercial infringement deserves the same level of punishment as a company seeking a profit from violations.
Still, Von Lohmann isn’t sure that this ruling alone will put a significant kink in the RIAA’s campaign. “I don’t think this will stall their campaign,” he says. “Settlements are driven by the fact that lawyers cost more than settling.”
— Swati Pandey
Photo: Julia Cheng/AP
While the world was bracing Sunday to see how markets would react to the government's Wall Street bailout plan, at least one corporate board committee was looking ahead to sunnier days.
The Compensation Committee of the CBS Corp. board, in a rare Sunday meeting conducted by phone, paved the way for billionaire media mogul Sumner Redstone to become a bit wealthier by awarding him $6.85 million in stock options for his role as chairman of the old-line television and radio company.
The effective date of Redstone's CBS stock options was Monday, the day the markets welcomed the government's bailout plan by driving down the DJIA more than 372 points. CBS was not immune: Its stock sank to $15.39 per share. According to a filing CBS made with the Securities and Exchange Commission on Wednesday afternoon, that amount became the exercise price for Redstone to purchase 445,000 newly granted stock options. The options will vest in four equal installments in successive years beginning in September 2009.
And since Monday, CBS shares have dropped even further, closing Wednesday at a new low of $14.72 per share. Redstone's new options, only three days old, are already underwater.
But Redstone, 85, is not one to bet against himself or his own companies. After all, he will be 89 when the final installment vests. Redstone, as he is fond of saying, expects to live forever, so that's not an issue. And if CBS shares bounce back (they were trading at nearly $32 a share a year ago) he will have made a handsome profit.
Still, it doesn't sit well with everyone. "There are a lot of questions for this company, such as what is the justification for such a huge option grant award, which dilutes the shares of everyone else who owns them?" said Dan Pedrotty, who monitors executive compensation issues as director of investment for the labor organization AFL-CIO. "And also, why now, when the stock is trading so low?"
CBS bumped those questions to Redstone's spokesman, Viacom Inc. executive Carl Folta. He points out that CBS restructured Redstone's compensation package last year to more closely tie it to shareholder value rather than salary and bonuses. Folta downplays the timing, saying CBS routinely decides its executive compensation in September. What's more, he says, CBS's compensation committee reviewed the matter during a regularly scheduled board meeting last week.
"The determination was made by an independent committee of the board," Folta said. "And this aligns Sumner's interest with that of the other shareholders." The matter was simply formalized on Sunday.
— Meg James
Photo: Kevin Winter/Getty Images
"I want to introduce you to two old dogs," Cook deadpanned. "No, I'm not talking about Bob and Harvey Weinstein," he said in introducing clips from Disney's Thanksgiving release, "Old Dogs," starring Robin Williams and John Travolta.
Cook's reference to the Miramax Films co-founding brothers, who had a well-publicized falling-out with their corporate parent, Disney, was not lost on the insider crowd of about 2,000 industry executives, theater owners and journalists who are attending the all-day event to see the new lineup, which was heavy on the dog theme.
The diminutive live-action star of Disney's Oct. 3 release, "Beverly Hills Chihuahua," made a rare and unscripted appearance onstage, provoking a Taco Bell quip from Cook. Stealing the show, however, was Disney's top dog, "Bolt," the studio's first animation project entirely revamped and overseen by Pixar Animation Studio's power duo, John Lasseter and Ed Catmull.
Disney showed the film, featuring the voice talents of Miley Cyrus and John Travolta, for the first time in its entirety. The crowd, donning 3-D glasses, gave the movie a warm reception.
Speaking of 3-D -- the technology that some in Hollywood think will lure people away from their big-screen TVs and back into theaters -- Cook made reference to several filmmakers who were at its forefront, including James Cameron and Bob Zemekis. He took a swat at his former boss, Jeffrey Katzenberg, who now runs Disney Animation rival DreamWorks Animation.
"These industry leaders, AND Jeffrey Katzenberg," said Cook, have been pioneers in the field, and he remarked that he read somewhere that Katzenberg was planning to release his first 3-D movie sometime soon.
So far, Cook's presentation has been heavy on sizzle and light on the steak. The only news nuggets are that between now and the summer of 2011, when Disney releases "Cars 2," the studio will try to keep the popular Pixar characters in front of a new generation of budding gear-heads by releasing a series of animated shorts called -- wait for it -- Cars Toon.
--Claudia Eller and Dawn C. Chmielewski
Photo: Cook (Guatam Singh/AP); chihuahuas (Alberto E. Rodriguez/Getty Images)
The instant gratification of video-on-demand and the novelty of movies by snail mail may get many a consumer more excited than an old-fashioned trip to the corner store, but for Blockbuster Inc., the store is still the thing.
The Dallas-based video rental and retail chain, which closed hundreds of stores over the last year, plans to revamp many of its remaining outlets, expand its movie and game offerings, and add more rental and download kiosks.
But it’s still keeping an eye toward increasing Internet-based downloads through Movielink, the digital movie site it acquired last year, and attracting more movie-thru-mail subscribers. Critics say stores are passé, but Blockbuster notes that its mail customers also have the convenience of returning or trading-in their mail-ordered movie at stores — something which Netflix can't do because it doesn't have brick-and-morter outlets (just in case an Ingmar Bergman flick showed up in the mail when you were more in the mood for "Sex and the City").
“Most people read a lot of interesting headlines, and we enjoy the headlines, about Netflix, Amazon, Apple, so forth,” says Tom Casey, Blockbuster’s chief financial officer, during a presentation at Thomas Weisel Partners’ Annual Consumer Conference on Tuesday. “But what you need to understand is we really have a market that we address that’s nearly $36 billion in size. Video-on-demand is actually pretty small.”
That $36-billion figure is the total market for DVD's and game sales — where Blockbuster has been expanding — and movie rentals. Blockbuster has a 40% share of the $9.6 billion movie rental business, of which in-store rentals account for more than half the total revenue, followed by mail subscription and video-on-demand, according to the company.
Blockbuster reported a loss of $44.7 million, or 23 cents a share, in the second quarter, ended June 30, compared to a $34.2 million loss in the same period last year. But same-store revenue rose 9%, and the company reaffirmed that it expects a profit for the year.
“Traffic tends to transfer to a nearby Blockbuster whenever they close a store,” says Arvind Bhatia, an analyst at Sterne Agee & Leach, Inc., adding that he estimates a “normal attrition” of about 150 store closures in the U.s. this year and next. Blockbuster now has about 8,000 stores worldwide.
"Financially, they're doing well," he adds.
Blockbuster plans to increase its stock of rental and retail movies and games at each store as well as pay for store refurbishing, from paint and carpeting to adding Blu-ray kiosks. Some stores have already undergone a broader remodeling, complete with gaming stations and cafes.
“Too many of the stores still look like the old blue-and-yellow 90s VHS stores,” Casey says.
Sure, “Fireproof,” starring Kirk Cameron as a firefighter struggling to save his marriage, is preaching to the choir — but it’s a big choir. Thanks to grass-roots support and bulk purchases from churchgoers, the faith-based drama could make an impact at the box office this weekend and beyond. The film, from Sherwood Pictures, producer of the under-the-radar, Christian-themed success “Facing the Giants” from 2006, has been No. 1 in advance sales on movie ticketing site Fandango.com with 31% of this week's business, albeit in a slow marketplace — even outpacing sales for the big-budget popcorn thriller "Eagle Eye," starring heartthrob Shia LaBeouf.
Nobody expects “Fireproof,” which distributor Samuel Goldwyn Films will open Friday at 800-plus theaters, to replicate the phenomenon of Mel Gibson’s “The Passion of the Christ,” which jolted the movie industry by grossing $83.8 million during its first weekend in 2004. Nor will it challenge DreamWorks/Paramount’s “Eagle Eye,” which is widely expected to be this weekend’s top grossing movie. (For the skinny on that and the other major Hollywood releases, don't forget to read the Movie Projector column this Friday.) Indeed, the micro-budget "Fireproof" production might have a hard time even cracking the top 10 at the box office this weekend.
But it could open at least as well as “Facing the Giants,” a high-school football saga that launched to $1.3 million and kept on playing, riding word-of-mouth to an ultimate gross of $10.2 million and robust business on DVD. Advance sales for “Fireproof” are much stronger, its marriage theme is more universal and the movie opens on twice as many screens, notes Michael Silberman, Goldwyn’s head of distribution. “The appetite is there but the meal has to be a good one,” Silberman says.
-- Josh Friedman
This week DreamWorks and parent Paramount Pictures will begin the thorny task of unwinding their business ties, specifically as it applies to more than 200 movie projects in development at DreamWorks that are owned by Paramount.
Those projects will be of particular interest to Steven Spielberg and his associate Stacey Snider because the new DreamWorks, backed by India's Reliance ADA Group, will essentially open its doors with a bare cupboard. Some of the hoped-for movies have been in the works at DreamWorks for years, and would provide a valuable jump-start for the new venture.
Among the 40 or so on Spielberg's A-list, which he wants to stay involved with either as a director and/or producer, are “Tintin,” a $130-million motion-capture film which Paramount is considering bankrolling; “Lincoln,” adapted from Doris Kearns Goodwin’s biography of the 16th president with Liam Neeson expected to star; “39 Clues,” based on a series of adventure books and games from Scholastic; “St. Agnes Stand,” adapted from Thomas Eidson’s western novel about a reluctant hero in the 1860s; “Atlantis Rising,” a sci-fi thriller based on the comic books series of the same name; and ”Children of The Lamp,” also from a series of Scholastic books, about a family of genies who pass for humans.
It’s unclear which of DreamWorks' projects will remain at Paramount -- with Spielberg's involvement -- or which ones will be co-financed or purchased outright by his new company.
Regardless, it's likely to be some time before Spielberg's venture will begin cranking out films. The reason: All the financing needs to be in place before it can start business. Reliance has already agreed to invest $550 million in equity in the company for half ownership. But JP Morgan Chase still needs to raise between $700 million to $750 million in debt. One person close to the situation says that JP Morgan plans to put up about $150 million of the total and will try to sell the remaining portion to other institutions.
In addition to the projects that are in limbo, some 150 DreamWorks employees are waiting to hear whether they will be able to join Spielberg and Snider. Nor has Paramount decided whether it will keep any of those left behind on the payroll. But things don't appear to be highly encouraging, given that Paramount told the DreamWorks principals on Friday that they could leave immediately and take their employees "without delay."
The one person who could calm nerves, however, is not around to reassure anyone. Spielberg left last weekend for a vacation in London, leaving some of his employees to ask Paramount executives what exactly was going on at their own company. That question was left unanswered.
-- Claudia Eller
Photo: Marsaili McGrath / Getty Images
Check out those parting words Paramount Pictures chose Friday when kissing DreamWorks good-bye. In its prepared statement, the studio brass told Steven Spielberg and his pals that not only could they leave and take everyone with them to their new production company (never mind those pesky employment contracts), but they could do it “without delay.”
In other words: Good riddance.
So, as Geffen rides off into the sunset, and Spielberg and Snider decide who among their 150 employees will and won’t make the cut to their new venture backed by India's Reliance ADA Group (tough luck to those who helped build the old DreamWorks and will be stranded on the unemployment line), Grey & Co. will only be able to celebrate their end to a tortuous three-year cohabitation with the dream team for so long.
That’s because Paramount's parent — specifically its fiscally tough Viacom Inc. honchos Sumner Redstone and Phillipe Dauman, and their band of not-always-merry shareholders, will be watching closely to see how well Grey can perform without DreamWorks in the house. Let’s be honest. Not every DreamWorks film was a hit like “Transformers,” or “Norbit” (think money losers such as “The Ruins” and “Flags of Our Fathers” ... and just this weekend "Ghost Town" was D.O.A. with about $5 million in U.S. ticket sales.
But, DreamWorks did come to Grey’s rescue with hit films when the former talent manager arrived at Paramount in 2005, discovered the cupboards nearly bare and then misfired with such box-office losers of his own, such as “Stardust” and “Hot Rod.”
Grey, whose studio this summer raked in some handsome fees (though no profits) from distributing the blockbusters “Iron Man” and “Indiana Jones and the Kingdom of the Crystal Skull,” now has to prove that Paramount can develop enough hits by itself.
And for the foreseeable future, the studio, at least on paper, looks to be in decent shape. Next summer the studio is betting big on a trio of fat-budget hopefuls: a “Transformers” sequel, J.J. Abram’s “Star Trek” and “G.I. Joe.” Then in Fall 2009 comes another big budget flick, Marty Scorsese’s mystery thriller “Shutter Island,” starring Leonardo DiCaprio, and DreamWorks' “The Lovely Bones,” which Peter Jackson directed and is based on Alice Sebold's bestselling novel.
Paramount’s 2010 release schedule will include an “Iron Man” sequel in May and an expensive live-action version of Nickelodeon’s animated TV series, “The Last Airbender,” directed by M. Night Shyamalan. Beyond that, the studio plans to relaunch its Jack Ryan franchise, based on character in the spy thrillers by author Tom Clancy; the computer animated movie "Rango," from director Gore Verbinski and to be voiced by Johnny Depp; and a sequel to its 2003 comedy hit "School of Rock."
Hopefully, for Brad Grey, good riddance won't turn out to be a wrong sentiment.
-- Claudia Eller
Photo: Brad Grey. Credit: Matthew Staver/Bloomberg News
Now that dissidents have eked out a narrow majority on the national board of the Screen Actors Guild, is former football player Doug Allen about to be put on the sidelines?
The onetime NFL linebacker has been a polarizing figure since his arrival in Hollywood nearly two years ago from the NFL Players Assn. Hailed by supporters as a breath of fresh air and a tough negotiator, Allen also been vilified by critics for alienating talent agents, clashing with New York board members and leading an all-out war against the American Federation of Television and Radio Artists.
The latter was the final straw for many of the dissidents, who saw the sparring as a costly distraction that weakened SAG's bargaining leverage. They campaigned to merge the two unions.
All of which would seem to spell trouble for Allen, who has been closely identified with the Membership First group that lost its majority on the national board in Thursday's election.
But guild insiders said dissidents haven't decided whether to replace Allen as a chief negotiator. Some are clamoring for his ouster, believing it would signal a definitive change of course in the stalled talks. Others fear that doing so would just make it harder for SAG to recruit a replacement -- he's the third executive director in three years -- and further divide a union sorely in need of less drama.
Those and other questions are expected to be raised in a key teleconference next week of the new Hollywood-division board members with their allies in New York and the regional branches.
New board member Adam Arkin, star of "Chicago Hope" and "Life," said he's keeping an open mind about the guild's chief negotiator: "We'll have to wait and see how flexible Doug Allen is in terms of responding to the needs of the board."
Ned Vaughn, a leader of the Unite for Strength group who was elected as an alternate board member, was more blunt: "The executive director takes his direction from the national board,'' he said. "Insofar as there is a new majority and there may be some change in that direction, we need to have a conversation with him [Allen] to make sure he is comfortable with that change."
-- Richard Verrier
Photo of Doug Allen by Carlos Chavez / Los Angeles Times
The high-stakes showdown between two squabbling Spanish-language media behemoths has been postponed to Jan. 6. U.S. District Judge Judge Philip S. Gutierrez in Los Angeles set the new date this morning, making it the fourth time this year that the trial has been rescheduled.
Mexico City-based Grupo Televisa three years ago sued its longtime U.S. broadcast partner, Univision Communications Inc., for unpaid royalties and breach of contract. Televisa, which produces the wildly popular telenovelas that fuel Univision's gigantic prime-time ratings, would desperately like a divorce. But, for now, it is locked in an unhappy and -- ironclad -- union.
As part of its nuptials in 1992, Televisa is required to provide its novelas exclusively in the U.S. to Univision through 2017. But Televisa believes that it has been shortchanged by the long-term arrangement. Univision, meanwhile, says it has been paying Televisa fairly according to the agreement. Still, Televisa would like the ability to shop its shows to another network -- it thinks it could get a lot more by doing so -- or renegotiate the terms of their relationship.
Some observers in the Latino television industry, however, believe Mexico's preeminent entertainment company is gunning for something bigger: Regaining an equity stake in Univision, the largest Spanish-language broadcaster in the U.S. (but that, of course, would require settlement talks -- and there's no hint of that right now).
Televisa was a major shareholder in Univision until last year, when a group of investors, including Los Angeles billionaire Haim Saban, took the company private in a highly leveraged $13.7-billion deal.
-- Meg James
Photo: Daniela Romo, an actress on Televisa's "Mujeres Asesinas," turns the tables on show producer Pedro Torres, courtesy of Televisa.
As if Mary Parent didn’t have enough to do trying to transform MGM from an also-ran into a studio that Hollywood can take seriously. Now, the former Universal Pictures executive who was hired in March to turn things around also has to help get movies made at MGM’s troubled smaller sister, United Artists —something recently departed CEO Paula Wagner apparently had trouble doing during her truncated tenure. “Valkyrie,” about a plot to kill Hitler.
Since Wagner left, Parent has gotten a lot cozier with Tom Cruise, who along with Wagner, still owns a 30% stake in UA and remains involved creatively. Parent has been taking a lot of meetings with Cruise and has attended test screenings of the actor’s upcoming holiday release,
Parent isn’t trying to hide her deeper involvement in UA. “I’m more active than I was before, helping out wherever and whenever needed,” she says, while insisting, “I am not running UA.”
In a sense, Parent has to say that, even though she sure looks like the de facto head. MGM has to tread carefully when it comes to UA. Even though MGM owns 65% of UA and markets and distributes its films, the smaller studio has a $500-million movie fund, originally set up for Wagner and Cruise, that is specifically earmarked for UA films.
That may explain why MGM spokesman Jeff Pryor says, “There are no plans to replace Paula Wagner.” He described the relationship between Parent and UA as a “collaborative effort,” in which she works closely with Cruise and UA production president Don Granger and his team to get movies queued up.
Indeed, they’re under intense pressure to move quickly to keep the UA revolving fund active. The bank agreement with Merrill Lynch & Co. stipulates that specific release dates have to be met in order for UA to retain full access to the funds, which anticipates four films a year for five years. But since Wagner and Cruise were recruited to revive UA, the studio has released only a single film — the money loser and critically drubbed “Lions For Lambs.” And "Valkyrie," due out Dec. 26, is the only other picture on UA's release schedule.
But, hey, what’s to stop Parent from guiding some MGM projects UA’s way so they can take advantage of the UA fund and fill its near-bare cupboard? Parent declined to comment on that. But the charge-ahead executive has put together more than a dozen projects in her brief six months at MGM — and doesn’t yet have the funds to produce all the big-budget movies she wants to make.
MGM has been struggling to raise its own multi-hundred-million fund to help pay for such pictures as two “Hobbit” films; a Cold War spy thriller adapted from Robert Ludlum’s suspense novel “The Matarese Circle,” to star Denzel Washington; and new installments of “Poltergeist” and “Robocop.”
So far, Parent has greenlighted just one film, “Cabin In the Woods,” a $30-million budget comic horror thriller written by "Buffy The Vampire Slayer" writer-producers Joss Whedon and Drew Goddard, which will also be directed by Goddard. Parent hopes to begin production in February to make an already planned Oct. 23 release date.
For weeks, MGM has been insisting that its bank deal is almost closed, but close doesn’t count in this market. Just ask Steven Spielberg, who’s been waiting to get a bank deal syndicated so he can finally launch his new DreamWorks.
— Claudia Eller
Photo: Parent (MGM)
Amid the country's gathering financial woes, the Walt Disney Co. today announced a new promotion to spur domestic theme park attendance next year: a freebie ticket to parkgoers on their birthdays.
Jay Rasulo, chairman of the Walt Disney Parks and Resorts, held an event in New York to announce that visitors will receive one free ticket to Walt Disney World or Disneyland on their birthday in 2009 (be sure to bring a valid ID and proof of date of birth).
The promotion, which begins in January, is designed to capitalize on a trend travel researcher Ypartnership dubbed the "celebration vacation." In a national survey of 4,600 adults who traveled in the past year, nearly three-quarters said they take trips to commemorate life's milestones, such as a wedding or anniversary, graduation, quinceañeras, a bar or bat mitzvah or retirement.
These travelers say they tend to spend more on these vacations, stay longer and include more people in their plans, said Ypartnership Chief Executive Peter C. Yesawich, who said the research was not funded by Disney.
Disney was quick to seize on the trend and turn it into an occasion to visit the parks.
"It really wasn't motivated by economic trends," Rasulo said, noting that the campaign has been nearly two years in development. "Of course, the underlying strategy behind everything we do is to have people come visit us."
The business impetus for the campaign is considerably more serious than the balloons and monogrammed mouse ears might suggest.
Disney reported lower attendance at Disney World for its June quarter, compared with last year, in part because the Easter holiday fell earlier than is typical this year. Spending at Disneyland was also off 2%. Chief Financial Officer Tom Staggs sought to assure investors in July that the domestic resorts are resisting the downward tug of the economy, noting that fall bookings were "virtually on par" with last year and that the December quarter was "modestly ahead."
Nonetheless, Bernstein Research analyst Michael Nathanson forecasts a 2% decline in park attendance in 2009, with a 7% drop in operating income that will not be offset by increased pricing. "So far, parks have been very resilient," he said, but Disney World is still vulnerable to a reduction in the number of flights to Orlando.
Hotel industry analyst PKF Hospitality Research predicts the nation's hotels will face a drop in decline that's worse than the aftermath of the terrorist attacks of Sept. 11, 2001, tied to a reduction in the number of domestic flights. The Los Angeles consulting group said occupancy rates in Anaheim are off 3.8% this year, compared with 2007.
Park promotions, such as the "Year of a Million Dreams" (which lasted 18 months) and the 50th anniversary celebration commemorating the opening of Disneyland, have been effective at boosting attendance -- even when Disney has no major new attractions to lure visitors, said Christian Aaen, a principal at Economics Research Associates, an entertainment and tourism consultant.
"Without any kind of major new market attraction," Aaen said, "It's a way to create enthusiasm in the market."
-- Dawn C. Chmielewski
Photo: Don Kelsen / Los Angeles Times
Levy told the Financial Times this week that his company expected strong growth from its Universal Music Group, saying that it was "extremely active in developing new business models, new sources of revenues. We are working with all the big names in the field of Internet, in the field of telecom equipment companies, big media companies, and this is a big opportunity."
Levy, as the Coolfer blog noted, has long been an optimist. But perhaps with good reason — Universal Music Group, the largest of the four major labels, reported a 29.1% increase in digital revenue in the first half of 2008, at constant currency. Digital sales accounted for 21% of the company's recorded-music total.
Way back at the turn of the century, Universal formed its ELabs division to handle "electronic commerce initiatives, Internet exploitation and new technology business opportunities worldwide." It was one of the first labels to partner with YouTube and allow the site to stream music videos by Universal artists — a group that includes heavyweights like this week's chart-topping rockers Metallica and high-selling rapper Lil Wayne.
Last year the company became the second major label, after fourth-place EMI, to sell MP3 tracks on Amazon.com, which lack the copyright protection software of most iTunes songs. And this month, Universal President Zach Horowitz credited video games like Guitar Hero with boosting sales of old releases like Weezer's "My Name is Jonas," according to gaming publications and blogs.
But the company has also been protective of its content, sometimes going to more extreme measures than other labels. The company threatened to sue YouTube in 2006 and did sue MySpace, before settling and agreeing to let its content appear on the soon-to-be-launched MySpace Music. More recently, it asked one woman to remove a clip she had posted on YouTube of her toddler dancing to a Prince song. The woman later sued (and The Times' tech blog has more).
And Universal's power in the digital field may come not only from its innovation and adaptation but also from its position as the 800-pound gorilla of the labels. It has the greatest share of the recorded-music market and also, since its purchase of a division from Bertelsmann two years ago, of music publishing.
"As the largest record company, certainly they're a desired partner for any digital distribution company," said Gartner analyst Michael McGuire. "They've defended their turf and moved into the digital area, but I don't think they're more or less innovative than the others."
-- Swati Pandey
Photo: Jean-Bernard Levy. Credit: Associated Press
The balance of power on the national board of the Screen Actors Guild could be shifted after Thursday night, when the union announces results of a hotly contested board election.
Regardless of who wins, however, don't expect to see any quick resolution to the stalemate with studios that has left actors working without a contract since June 30.
The election has pitted a group of dissidents in Hollywood against the more hard-line incumbent group known as Membership First, with celebrity supporters lining up on either side. It's Tom Hanks vs. Martin Sheen.
Up for grabs are 11 national board seats in the powerful Hollywood division -- that's where the majority of SAG's members reside -- plus another 22 for those who serve as alternates.
Because the Membership First faction holds only a slim majority on the national board, the dissidents known as Unite for Strength need to win only about six of the 11 seats to gain a majority on the 71-member national board. They would achieve that by teaming up with board members in New York and the various regional branches who have been at odds with the current leadership.
The group has made no secret of its unhappiness with SAG Executive Director Doug Allen over his handling of the negotiations and relations with the smaller actors union the American Federation of Television and Radio Artists. And with control of the national board, the dissidents could take steps to either replace Allen as chief negotiator or fire him outright.
Neither step would be easy and could expose the union...
Warner Music Group Corp., on the heels of three consecutive quarters of overseas revenue growth, today announced a management shake-up that it hopes will streamline its global strategy.
“We can no longer organize the company as simply ‘U.S.’ and ‘non-U.S.’ operations,” said Chairman and Chief Executive Edgar Bronfman Jr. in a statement.
Warner, the sole publicly traded stand-alone music company and home to Kid Rock and My Chemical Romance, will instead divide its work into three regional areas: continental Europe, Asia-Pacific and U.K./Americas.
Newly appointed Vice Chairmen Lyor Cohen and Michael Fleisher will lead the charge. Warner Music International Chairman and Chief Executive Patrick Vien is leaving the company.
Fleisher joined Warner shortly after the company split from Time Warner Inc. in 2004 and helped it go public the following year. He will head global corporate strategy.
Cohen will oversee recorded music operations in Britain and Latin America, in addition to his work running North American operations.
Global Controller Steven Macri was named chief financial officer. Lachie Rutherford and John Reid will continue to run the Asia-Pacific and European sectors, respectively, and Inigo Zabala will report to Cohen and continue to lead Latin American operations.
Warner credits Cohen with revitalizing its U.S. recorded music operations by significantly increasing digital revenue and running major labels Atlantic and Warner Bros. Records. In March, the company doubled his base salary to $3 million. Cohen stirred controversy in August, when he sold nearly a quarter of his stock at a time when the company claimed its shares were undervalued.
“While [Warner] continues to reduce staff and scale back compensation for its employee base, its senior management continues to carry on as if the music industry was in its heyday — this simply cannot help morale at [Warner],” wrote Pali Research analyst Richard Greenfield in an August report (registration required). He didn't respond to a request for comment.
Warner reported higher revenue and narrowed its losses in its recently concluded fiscal third quarter thanks in part to the strong performance of its international operations. The company recently acquired artist management and tour production companies in Spain, France, Japan and elsewhere, and has expanded its market share since going public.
But the company has also suffered a roughly 70% decline in its stock price over the last two years. And Wedbush Morgan Securities Inc. analyst Chris White sees the changes as mostly cosmetic.
“Warner may shuffle people around, hire new people, let some people go, but it probably has little bearing on the company’s ultimate financial performance in the near term,” he said.
Warner’s stock price declined 1.7% to $7.97.
Online sites YouTube and Hulu stream billions of videos every month and attract millions of viewers, but when it comes to buying movies and television shows, consumers are still decidedly old school.
A new report from market researcher NPD Group shows that $8 out of every $10 spent on movies goes to buying and renting DVDs.
The findings, presented today at the DisplaySearch HDTV 2008 Conference in Hollywood, indicate that 41 cents of every dollar the consumer budgets for movies and TV shows goes to buying a DVD, and 11 cents goes to purchasing a season's worth of TV shows on DVD.
An additional 29 cents out of every dollar is spent on DVD rentals, which suggests that Blockbuster isn't about to go out of business anytime soon, despite the growing popularity of Internet video.
By contrast, digital rentals and purchases, through services such as Apple Inc.'s iTunes or Amazon.com's new online streaming video service, account for just 0.5% of consumer spending on renting or buying movies and TV shows. The results were based on a survey of more than 11,000 consumers and balanced to reflect the Internet-connected U.S. population age 13 and older.
"I think there's a big difference between looking at things on YouTube or getting the content for free online versus paying to watch a movie or a television show," said Russ Crupnick, NPD senior entertainment analyst. "My guess is it's going to take some time for people to latch on to that behavior."
That's not to minimize the strong growth of video-on-demand services or digital downloads, said Danny Kaye, executive vice president of 20th Century Fox Home Entertainment. Apple, for example, said in June that its customers were renting and purchasing more than 50,000 movies every day through iTunes.
Nonetheless, plasic discs continues to rule the day, in part because habit still trumps hot technology. For a majority of Wal-Mart Nation, it's still preferable to pick up a DVD at a local retailer or supermarket than to spend a couple of hours downloading it off the Internet.
Although DVD sales are likely to remain flat this year, Kaye believes spending on new, high-definition Blu-ray discs will restore the studios' packaged media business to growth within two years.
-- Dawn C. Chmielewski
Photo: Gary Gardiner/Bloomberg News
And the little yelper, being unleashed in theaters Oct. 3, could show plenty of box-office bite despite detractors who say the marketing materials perpetuate ethnic stereotypes.
The PG-rated family film features Piper Perabo and Jamie Lee Curtis and a voice cast headed by Drew Barrymore along with such Latino stars as George Lopez, Salma Hayek, Edward James Olmos, Cheech Marin and Andy Garcia.
Early tracking is solid but not stellar among general moviegoers — Sony Pictures’ teen hipster romantic comedy "Nick & Norah’s Infinite Playlist," which opens the same weekend, has lower awareness but higher interest levels — but kids and moms, the demographics that turn talking-animal flicks like "Alvin and the Chipmunks" into hits, are keen on it.
Latinos, who tend to be among the most avid moviegoing groups in the U.S., could give "Beverly Hills Chihuahua" a huge boost, especially in urban markets like Los Angeles and Chicago. According to the Motion Picture Assn. of America, Latinos saw an average of 10.8 movies in 2007, compared with 7.9 for Caucasians and 7.8 for African Americans.
"The movie’s generalizations about Hispanics and its stereotypical depictions of Mexicans will not get a positive response from most of the 46 million Hispanics living in the U.S.," said Anton Diego, president of EveryMundo Inc., a marketing firm that helps businesses target Latinos online.
The trailer, Diego notes, opens with the voice of a Chihuahua called Papi describing how his descendants fought alongside Aztec soldiers, then pans to footage of Machu Picchu, Peru — a symbol of the Incan Empire located in a different continent. The music in the trailer is mambo, which originated in Cuba, he adds.
A viral video campaign (with no mention of Disney or the movie title, in today’s fashionable stealth style) has elicited groans for its portrayal of Chihuahuas as revolutionaries declaring "No mas!" to being carried in purses — but "Mas!" to all-you-can-eat taco bars.
Disney declined to comment on the movie's marketing.
Alex Nogales, president of the National Hispanic Media Coalition, said he saw two screenings of the completed film after hearing a complaint about the project and found nothing offensive.
"It's not supposed to ignite the world with social consciousness, but this is a clean, entertaining picture with an all-star cast that brings the Latino presence to a whole new height," Nogales said. "It's a marvelous little film that is going to send everybody off to buy their own Chihuahuas."
The marketing effort appears to be clicking with broad audiences.
The trailer, featuring a Busby Berkeley-type musical number, has been popular since it premiered with this summer’s "The Chronicles of Narnia: Prince Caspian," according to executives at Disney and rival studios.
Disney has also raised awareness for the movie, originally titled "South of the Border," with a poster campaign in various cities featuring a Chihuahua and the simple message "Heel," done in the style of artist Shepard Fairey’s "Hope" signs for Barack Obama.
The company’s more traditional movie posters are plastered with a series of cheeky tag lines: "I, Chihuahua," "You Want Some of This?," "Actual Size" and, of course, "50% Warrior. 50% Lover. 100% Chihuahua."
Exhibitors and Wall Street analysts expect "Beverly Hills Chihuahua" to gross $40 million to $50 million domestically during its full run, targets that are almost certain to rise as the opening draws near. If the buzz turns out to be really good, "Chihuahua" could end up nipping at the heels of "Chipmunks" ($217 million domestically).
With summer over, current films such as "Burn After Reading," "Righteous Kill" and "The Women" have been tailored toward adults, said Bruce J. Olson, president of the Marcus Theatres chain, based in Milwaukee.
"There is a pent-up demand among families, so the market is ripe for 'Chihuahua' to be the first sleeper hit of the fall," he said.
Chris White, an analyst at Wedbush Morgan Securities, noted that DreamWorks/Paramount’s over-the-top, R-rated action comedy "Tropic Thunder" drew fire from some groups for supposedly stereotyping the mentally disabled, but it opened at No. 1 and topped the box office for three weeks in late summer.
"I’m not a hard-core dog fan," White said, "but even I think 'Beverly Hills Chihuahua' is a cute concept and I definitely want to see it."
-- Josh Friedman
Hollywood movies make their way into the living room in a wide array of methods. Films can be purchased on DVD or Blu-ray discs, delivered by mail via Netflix, downloaded to a computer or portable player, or streamed to a television set using an Internet-connected device such as an AppleTV or Vudu.
Add to this digital panoply the ability to (legally) burn mainstream Hollywood movies to DVD.
Online video service CinemaNow launches a download-to-burn option that permits consumers to download a digital movie file and create a DVD that can be watched on any old DVD player. Five of the major studios -- including Paramount Pictures, Warner Bros., Universal Pictures and Sony Pictures -- have agreed to participate in a trial, according to CinemaNow.
"We think it’s important, from the point of view of consumers, to be able to get content to the TV," said David Cook, CinemaNow's president and chief operating officer.
To be sure, CinemaNow has long offered a "burn-to-DVD" feature. But compatibility problems made this a less-than-reliable option for consumers, who couldn't be sure whether the discs would play on their DVD player. Studios, meanwhile, have also been wary because these discs lack the same protection built into commercial DVDs.
The new discs from CinemaNow are similar to those DVDs purchased at a store -- and boast the same copy protection.
Sonic Solutions developed this new burn-at-home technology, dubbed Qflix, which has been more than a year in gestation as it waited for the DVD Copy Control Assn. to amend its specifications so that copy protection (known as Content Scramble System) could be added to recordable DVDs. Manufacturers also took time to ramp up.
Mark Ely, Sonic Solutions' executive vice president of strategy, said that despite the prolonged wait, and the emergence of new technologies to bring digital video to TV screens, Qflix addresses a consumer need: a way to watch digital files on the most ubiquitous movie playback device around: the DVD player.
"The DVD is this highly compatible, very flexible format," Ely said. "It can play back on the PC, play back on a set-top, or play back in your mini van. When we think about it, from a technology standpoint, really it's the ultimate portable."
Some analysts expect the new download-to-burn offering, which can take as long as two hours to complete, won't take off like a house afire, but rather appeal to the early adopter crowd.
"Today, a lot of DVD buys are impulse buys, when walking through Wal-Mart or Target," said Wade Holden, a motion picture and home video analyst with SNL Kagan. "For this service, you’ve got to sit down, sift through what’s there, and then wait for it to download, versus walking by the new release display, saying, 'Hey, I didn't know this release was out this week,' tossing it in the cart and you’re on your way."
--Dawn C. Chmielewski
Photo credit: Sonic Solutions
Metallica has come a long way since leading the charge against erstwhile file-swapping site Napster in 2000.
When a Paris record store allegedly started selling the band’s latest album, “Death Magnetic,” more than a week before its official Sept. 12 release date, drummer Lars Ulrich reacted in an uncharacteristic Zen-like fashion, telling a San Francisco radio station, “It’s 2008 and it’s part of how it is these days, so it’s fine. We’re happy.”
That's a decidedly different tune for Ulrich, who in 2000 said to The Times, "Everyone thinks this is about the money. It's not. I've got more money than I could spend in seven lifetimes. The issue is control. We want to control what we create."
That year, Metallica sued Napster along with a handful of universities for providing the technology that allowed 300,000 users to swap Metallica songs.
Metallica wasn’t alone in suing Napster — rapper Dr. Dre filed a similar suit, Madonna complained, and a coalition of record companies succeeded in shuttering the site — and it ultimately settled its suit. But the fight tarnished the band’s edgy reputation.
"They took a strong stance because they were a strong band," said Eric German, a partner at Mitchell, Silberberg & Knupp, a firm that represented the recording industry against Napster (but not Metallica). "It was the big guy at the bar sticking up for everyone else. They took a lot of heat, a real hit for something that was the honorable thing to do."
The band also refused to join a legitimate online retailer, iTunes, until five years after its launch. Still, the band has sold 5.2 million digital downloads and 50 million albums, making them the fifth highest-selling artists since 1991, according to Nielsen SoundScan.
The aging metal rockers do seem to be getting hip to the way youths consume music now: “Death Magnetic” was released simultaneously today in stores, online and as a download on “Guitar Hero 3.” (A couple of singles came out early on iTunes.)
Last week, Ulrich praised all the little people in “YouTube world” who had posted their covers of Metallica songs. The band launched a channel highlighting fans’ work — including one who had already covered songs from “Death Magnetic.” While many musicians support such efforts, some, most notably Prince, have lashed out against user-generated content.
"They might just be thinking, 'If you can’t beat 'em, join 'em," German said. He noted that encouraging covers on YouTube "may very well be a wise understanding of their fan base. But it doesn’t mean it’s legal, in a blanket way, for this stuff to occur."
The band also launched its Mission: Metallica website in May, letting users create profiles and see behind-the-scenes footage of the band’s work. Users can also pay extra for various levels of access. “Death Magnetic” also has some variable pricing — a deluxe vinyl edition will cost fans $109 through Metallica’s website; the physical CD is $17.99, and a downloadable album is under $10 on iTunes and Amazon.
And -- oh -- you can also stream it for free on Napster.
-- Swati Pandey
Photo: Rock band Metallica Credit: AFP/Getty Images
With the new iteration of MySpace Music poised to launch, the joint venture between News Corp. and three major music companies is still looking for someone to fill the top job.
Andy Schuon, a former head of programming at MTV and Infinity Broadcasting (now CBS Radio) and longtime Universal Music executive, is among two finalists interviewing this week, according to industry sources. The other candidate is Owen Van Natta, the former vice president of operations and chief revenue officer at rival social networking site Facebook.
Schuon's career has been at the intersection of technology and music. His most recent venture is "C" Student Entertainment, a boutique radio and mobile media company co-founded with Steve Lehman, former chief executive of Premiere Radio networks. It struck a deal to bring celebrity blogger Perez Hilton's celebrity and entertainment news to radio audiences.
Schuon was among the early label executives to embrace digital distribution. He did a stint as head of pressplay, an early, if hamstrung, venture started by Universal and Sony Music Entertainment to provide a legitimate source for music on the Internet. That service was acquired in 2003 by Napster.
Van Natta, who was responsible for business development and strategic partnerships at Facebook until he left in April, previously worked at Amazon.com, where he was vice president of worldwide business and corporate development and also was part of the founding team of its A9.com site, a search engine.
MySpace Music's six-month CEO search has reportedly met with its share of frustration. But company insiders contend it hasn't been that big an issue because Chief Executive Chris DeWolfe and Chief Operating Officer Amit Kapur are heavily involved in the launch.
Several other execs with Internet experience have been approached about the gig, including former AOL executive vice president Jim Bankoff, BigChampagne chief executive Eric Garland, and Benchmark Capital entrepreneur Dave Goldberg and Ian Rogers, both formerly general managers of Yahoo Music.
MySpace declined to comment on its search for a head of its music venture.
-- Dawn C. Chmielewski
Photo: Van Natta (Jakub Mosur for the Times)
The studio, best known for low-budget flick horror franchises "Saw" and "Hostel," announced the partnership with the Spanish firm, Zed, which distributes ring tones, wallpaper and games through a network of 130 mobile operators, reaching over 50 regions and -- so Zed said -- 2 billion mobile subscribers worldwide.
Curt Marvis, president of digital media for Lionsgate, notes the deal allows the studio to bring its critically acclaimed televison shows, such as AMC's "Mad Men" and the Showtime comedy "Weeds," to a new and, it hopes, fast-growing platform.
Partnering with Zed lends the studio expertise in mobile space, Marvis said.
Mobile content is an small but alluring business for the Hollywood studios, with a growing number of video-capable devices and speedier wireless connections setting the stage for watching movie and TV shows on cellphones. Of course, it's yet to be proved that consumers have the interest or patience to watch anything longer than ADHD-length snippers on their mobile device.
Marvis says he gets that there is no immediate payday.
"In the next two years, it's not going to change the fortunes at Lionsgate. But with a billion new (mobile phone) handsets sold every year these days, it's a distribution channel you can't ignore anymore," he believes.
--Dawn C. Chmielewski
Photo: A scene from "Saw"; Credit: Steve Wilkie/Lionsgate
"Towelhead," from Warner Independent Pictures, is based on an acclaimed novel and was made by a filmmaker with plenty of art-house credibility: writer-director Alan Ball, creator of "Six Feet Under" and screenwriter of "American Beauty."
But the R-rated comedy-drama, opening Friday at four theaters in New York and Los Angeles before expanding to 10 more markets next week, could be the tough sell of the weekend and beyond. The controversial title is taken from an anti-Arab slur and the story looks unflinchingly, though not graphically, at childhood sexual assault as well as racism.
"I took the script to every studio in town and they all told me the same two things: 'We love the writing but have no idea how to market this,' and, 'I can’t possibly make this — I have daughters,' " said Ball, who found independent financing for the $8-million budget film through upstart Indian Paintbrush.
Warner Indie bought the rights to the picture -- its final release thanks to Time Warner Inc. consolidation -- out of the 2007 Toronto International Film Festival, where it screened under the title "Nothing Is Private."
Ball said that title was the best name "among pages and pages of ideas" that marketing consultants came up with to help sell the film. However, screening audiences universally complained that it was pointless, so he was able to persuade Warner Indie to go back to the original title, taken from Alicia Erian’s novel.
The Greater Los Angeles Area office of the Council on American-Islamic Relations recently protested, asking for a title change, but the filmmakers and studio stood firm. Ball said that as a gay man he didn’t want to make light of hate speech, but added: "The whole point of Alicia’s title was to show the impact that such words can have."
The picture has received mixed reviews, with some critics cringing from the subject matter. But Ball said there is "a sizable audience that doesn’t shy away from, and in fact seeks out, movies that give them something to think about. Of course, it’s not the same size as 'The Dark Knight' crowd."
-- Josh Friedman
Photo: A scene from "Towelhead." Credit: Associated Press
Next week, nearly one-third of SAG’s 71 national board seats will be up for grabs when votes are tabulated in an election that could change the course of the union — and, perhaps, revive stalled contract negotiations with the studios. The challengers are unhappy with the guild's leaders and have accused them of mishandling the contract talks, which have left actors working without a contract for more than two months.
But even before ballots have been counted, the dissidents in the dominant Hollywood division are fuming over the timing of a "special bulletin" entitled "Your Negotiating Committee Fights on to Achieve a Fair Contract."
The bulletin was recently mailed to the guild's 120,000 members at an estimated cost of more than $100,000. The 12-page report went far beyond the typical contract update and included a point-by-point critique of the studios' offer. It warned that the studios were seeking to "take away many of the protections the union has fought so hard for" while denying even the union's most modest proposals, like a 10-cent increase in the mileage rate for actors, which has remained unchanged since 1980.
The mailer also included response cards asking members to advise the negotiating committee on whether to accept the studios' offer as is or continue negotiating to secure a better deal.
Ned Vaughn, a board candidate and spokesman for "Unite for Strength," which is running a slate of candidates to fill open Hollywood division seats, questioned why the mailer was sent out in the middle of a board election, rather than, say, in early July just after contract negotiations sputtered.
"A contract update mailer that contains so little updated information but so clearly casts the current leadership in a positive light is suspect," Vaughn said.
Vaughn and his group, which counts Tom Hanks, Sally Field and Alec Baldwin among its celebrity backers, have blasted SAG leaders over their negotiating strategy and warring with the smaller actors union, the American Federation of Television and Radio Artists. They're squaring off against Membership First, the faction that holds a slim majority over the SAG board and dominates the union's negotiating committee. Its celebrity supporters include Sean Penn and Martin Sheen -- not to mention SAG President Alan Rosenberg.
Hollywood dissidents and New York board members also have questioned why the response cards contain bar codes that would allow SAG to identify how individual members voted, violating a longstanding tradition of anonymous voting.
"Frankly, had this been disclosed, I don't know the board would have agreed to it," said former SAG President and national board member Richard Masur. (Masur has been a vocal critic of the Rosenberg camp.)
A spokesperson said Wednesday that Allen was tied up in meetings and unavailable to talk. But in a letter to the board posted earlier this week on SAG's website, he stated that the poll was simply intended to sample member views on the studios' proposals and contract negotiations. The bar code, he added, is aimed at preventing fraud and to permit a "demographic analysis of the response to determine how representative the response is."
Allen said that he had instructed the company tabulating the results to "make sure that the name of any responding member is to be kept confidential and is not to be used for any purpose."
Negotiating committee member George Coe called criticisms of the mailer "ridiculous" and said the purpose of the mail card was solely to help guide the negotiating committee. Besides, he added, most members probably cast their votes for the board before receiving the mailer anyway. "If the timing was based on winning the election, this would have been sent out two months ago," he said.
-- Richard Verrier
Photos: Vaughn (handout); Rosenberg and Allen (Carlos Chavez/Los Angeles Times)
When it comes to Hollywood, Asia isn’t just a destination for outsourcing. It’s a place to insource.
Yesterday 20th Century Fox became the latest major American studio to set up shop abroad, joining its fellow News Corp.-owned media company STAR to produce and distribute movies for Asian audiences in Asian languages.
The new venture, Fox STAR Studios, will aim to be a “one-stop shop that encompasses film acquisition, development, marketing, production and distribution in India,” said newly appointed Chief Executive Vijay Singh in a statement. The efforts will later expand to China and Southeast Asia.
News Corp. has long had a foothold in the continent’s media field, having bought STAR — a television broadcaster and producer with holdings in film, cable systems, and wireless and digital services — more than a decade ago.
In May, Fox Filmed Entertainment, of which 20th Century Fox is a division, announced the launch of an international unit to expand the company’s production and distribution of local-language movies around the world.
Indeed, Hollywood is increasingly turning to Bollywood for partners in what it describes, in somewhat colonial sounding terms, as "indigenous productions."
Last fall, Sony Pictures Entertainment released “Saawariya,” a Bollywood film it produced as part of a longer-term collaboration with the Indian media company Eros International. This fall, Walt Disney Co. is set to premiere “Roadside Romeo,” the first of a number of animated films it plans to make jointly with Mumbai-based Yash Raj Films.
And early next year, Warner Bros. Pictures plans to release “Chandni Chowk to China,” which has an appropriately globalized plot — an Indian cook from the eponymous poor Old Delhi neighborhood pretends to be a martial arts master.
Viacom Inc. and NBC Universal have also expressed interest in making movies in India, and have made inroads in other Indian media markets.
“We’ve seen a clear trend in Asia with the increasing prominence and market significance of local product,” said David Molner, managing director of Screen Capital International, a Beverly Hills media investment firm. “The management at Fox has fundamentally understood this.”
-- Swati Pandey
Photo: A scene from "Saawariya." Credit: Columbia Pictures
Walt Disney Co. Chief Executive Bob Iger told the London media today that he is considering possible acquisitions in the U.K. as the company looks to global markets for expansion, according to published reports.
Iger declined to comment on whether the company is interested in the U.K.'s largest commercial broadcaster, ITV, parrying the question by telling Bloomberg, "Hasn't everyone looked at ITV?" The company, home of the long-running soap opera "Coronation Street," is periodically the topic of takeover rumors.
Speculation that the London-based company is vulnerable to a takeover has been fueled by the company's precipitous 45% stock decline this year. ITV rejected a 2006 offer for a controlling interest in the firm.
Disney has shown heightened interest in the market, acquiring the parenting Web site raisingkids.co.uk in August to bolster its portal in the U.K. Iger told Bloomberg the company has a "very strong balance sheet," and that U.K. is one of the "primary markets" in which Disney sees opportunities.
Spokespeople for Disney confirmed the published reports.
--Dawn C. Chmielewski
But when Warner Bros. pushed the release of the next film in the Potter franchise, "Harry Potter and the Half-Blood Prince," from Nov. 21 to summer 2009, the studio set off a chess game of another sort that’s being played out in Hollywood.
In the last few weeks, distributors have shifted several major fall releases -- including the animated 3-D comedy "Bolt," the vampire thriller "Twilight," the James Bond adventure "Quantum of Solace," and the epic romance "Australia" -- to new dates in November, hoping to take advantage of the box-office void created by Harry’s departure.
November is one of the biggest months for movie ticket sales outside the summer popcorn season, and its three biggest openings ever were all Harry Potter movies, with weekend hauls ranging from $88 million to $103 million.
The chain reaction was set off Aug. 14 when Warner stunned Potter-heads around the globe with its announcement. The move was aimed at bulking up the studio's 2009 slate -- thanks to the box office success of "The Dark Knight" this year Warner can afford a breather.
Chuck Viane, Walt Disney Studios’ president of domestic distribution, said he was having lunch with other top executives at the Burbank company when the news broke. After checking that afternoon with the studio’s computer animation department, which was wrapping up post-production on "Bolt," and theater chain bookers around the country, Disney within hours advanced the film to Nov. 21, the Friday before Thanksgiving, from Nov. 26.
"If someone is going to give you five extra days of great grosses, why not seize that opportunity," Viane said.
Summit Entertainment, meanwhile, saw a chance to expand its holiday season run for "Twilight," which the company believes could launch a lucrative, female-driven franchise based on the best-selling novels.
The next day, Aug. 15, even with "Bolt" having pounced on the Potter date, Summit moved "Twilight" up to Nov. 21, from Dec. 12. "Bolt," the story of a TV star dog who thinks he has superpowers, is aimed at family audiences while "Twilight," a live-action PG-13 fantasy about a teenage girl who falls in love with a vampire, has a darker tone, so the films are likely to have little overlap.
"Harry Potter is a box-office force that everybody has to work around," said Rob Friedman, co-chairman and chief executive of Summit. "Once the Warner guys decided to move it into 2009, a big vacuum -- and a big opportunity -- was created."
Potter’s move freed up plenty of business not only on its opening weekend, but also over the post-Thanksgiving weekend, when it still would have been a formidable competitor.
Sony Pictures, which successfully rebooted the Bond franchise with "Casino Royale" on Nov. 17, 2006, also shook up the schedule in a bid to maximize holiday season business. The studio moved "Quantum of Solace," the second film with Daniel Craig as the tuxedoed British secret agent, to Nov. 14 from Nov. 7.
Sony got closer to the mid-November period that had worked so well not only two years ago but also with several previous Bond films. Sony wanted to "stick with a winning formula," noted Jeff Blake, the studio’s chairman of marketing and distribution, without getting too far away from the film’s locked-in, Oct. 31 launch date in Britain.
And two weeks ago, Twentieth Century Fox moved "Australia," one of its key fall releases, to Nov. 26 from Nov. 14. Steering clear of Bond should help the old-fashioned, adult-skewing drama from director Baz Luhrmann attract moviegoers on its opening weekend.
A Fox spokesman says the studio was motivated by the absence of a certain young wizard. The busy holiday weekend is "truly befitting this Baz Luhrmann motion picture event," he said.
But one chess game leads to another. This week, Universal Pictures moved one of its big-budget, effects-driven "tent poles," the creature spectacle "Land of the Lost," from July 17 -- the new Potter date -- up to June 5. "Lost" may include lots of dinosaurs and fictional lizardlike things called sleestaks, but the Potter franchise is next summer's 800-pound gorilla.
-- Josh Friedman
Photos: From top, Bolt (Disney Enterprises); Twilight (Summit Entertainment); Quantum of Solice (Associated Press).
Live Nation Inc., the concert promoter that recently signed deals with such high-profile artists as Madonna and Jay-Z, is flush with proceeds from the recent sales of assets. And it says it wants to spend the money, although the company is being a bit cagey about exactly how.
As part of its ongoing effort to focus on its core concert business, Live Nation
said Tuesday that it closed on the sale of its motorsports division for $205 million to Feld Entertainment, owner of the Ringling Bros. and Barnum & Bailey Circus as well as Ice Capades and Ice Follies.
The sale of the motorsports division, which produces hundreds of monster truck and motocross races each year, nearly complete's Live Nation's two-year divestiture program to pare the company down to a pure music industry player.
John Hopmans, Live Nation’s executive vice president of mergers and acquisitions and strategic finance, wouldn't detail specific plans on what the company plans to do with the proceeds from the sale, which include $175 million in cash plus what the company describes as a "performance-based earn-out of up to $30 million."
“There are no immediate plans for the money other than to reduce our debt and look at other properties or opportunities that might reinforce our core music business,” he said.
Since the company began selling its theater and sports assets -- including holdings in the U.S. and abroad -- it has collected $465 million in proceeds.
Over the same period, Live Nation acquired the House of Blues, concert promoters outside the U.S., and music merchandisers that produce items for the Beatles, Jimi Hendrix and Pink Floyd. The company posted increased revenue of $1.2 billion in the quarter ended June 30, up from $986 million in the same period a year ago. Net income fell to $1.2 million from $9.9 million, but still beat estimates of analysts, who had expected a net loss.
Shares rose 4.3% to $15.89 in after-hours trading, following the announcement.
-- Swati Pandey
Hollywood’s infamous “Pirates” (of the Caribbean that is) — director Gore Verbinski and actor Johnny Depp — are teaming up to make their first animated movie. But, surprisingly, they’re not making the big-budget film “Rango” at Disney, where their three “Pirates of the Caribbean” blockbusters generated nearly $2.7 billion in worldwide ticket sales.
Instead, the comedy about a chameleon (voiced by Depp) who gets thrown out of his aquarium in the desert and embarks on a journey of self-discovery will be bankrolled, marketed and distributed by Paramount Pictures. The Viacom Inc.-owned studio, which once would have seemed like an unlikely home for such an ambitious project, now has a solid track record marketing and distributing big animated pictures through its deal with DreamWorks Animation. DreamWorks Animation (not to be confused with the live-action DreamWorks, which has had a rocky relationship with Paramount) produced such hits as “Shrek the Third” and “Kung Fu Panda.”
“Rango” -- expected to cost about $150 million -- is planned for release in March 2011.
So, why is Paramount making "Rango" and not Disney, where Verbinski and Depp have had so much success? A person close to the matter said that Verbinski, who has been developing the project for years, didn’t even pitch it to Disney when the project was shopped recently because he knew the studio would never give him the level of control and ownership he sought. Disney prefers to exploit its own titles and those under its Pixar label across all its businesses -- television, video, theme parks, merchandise -- and doesn't like to share too much of the profit on its big animated movies.
But at Paramount, which owns all worldwide rights to "Rango," Verbinski and Depp will get a share of the profit.
Written by Oscar-nominated screenwriter John Logan, whose credits include "Gladiator” and “Sweeney Todd: The Demon Barber of Fleet Street,” “Rango” will be Verbinski’s first venture into animation. He will be enlisting some of the visual effects techniques he developed with George Lucas’ Industrial Light and Magic to create the Davy Jones character in the “Pirates” pictures.
-- Claudia Eller
The entertainment giant's flagship website set a record in July for total video streams. Disney.com logged 186.7 million streams for the month -- more than double the 75.5 million NBC touted for the Beijing Olympics.
Disney employed the powerful lure of the Disney Channel's tween acts to bring in the clicks. The site featured premieres of Miley Cyrus' "7 Things" music video and the "Burning Up" video from musical heartthrobs the Jonas Brothers. Disney.com also offered an exclusive online glimpse of the forthcoming film, "High School Musical 3: Senior Year."
As a result, comScore Media Metrix ranked Disney Online as the sixth most popular online video site, behind Viacom Digital, but ahead of such established online video destinations as Veoh, Video Egg and Break Media.
In a sense, Disney's online destination has come full circle, returning to the entertainment focus of a decade ago, when neither Internet speeds nor computers were up to the task.
Dawn C. Chmielewski is an entertainment writer who covers Walt Disney Co.
But that’s exactly what’s holding up the DreamWorks co-founder and his cohorts from launching their new movie company with an equity infusion from India’s Reliance Big Entertainment. Although Reliance is poised to invest $500 million in the venture for a 50% ownership stake, that deal hinges on the group getting a firm guarantee from lead bank JPMorgan Chase to raise up to $700 million in debt financing to satisfy the business plan to make four to six movies a year. JPMorgan, which will not underwrite the entire portion of the loan as DreamWorks had hoped, will now attempt to syndicate it -- and that could take months. People close to the matter say that DreamWorks is still looking for further clarification on the term sheet it recently received from the lead bank and that negotiations are continuing.
All of this means that the protracted deal that DreamWorks was hoping to have locked up by now may not happen until November or December. And you can just imagine how pleased this must make Spielberg’s DreamWorks colleagues David Geffen and Stacey Snider, who have been champing at the bit to leave Paramount Pictures after a stormy 2½-year relationship with studio chairman Brad Grey. Grey and his team at the Viacom Inc.-owned studio, which bought DreamWorks for $1.6 billion in 2006, also can’t wait to be free of the DreamWorks foxes in the henhouse.
Of course, there’s always a chance that the stars may align sooner and this overly talked-about deal will finally get done. Geffen, who had an option to get out in his Paramount contract in January of this year, still hasn’t given the studio official notice. Once he does, both Spielberg and Snider can leave 60 days later, but no earlier than Oct. 31 of this year without getting Paramount’s blessing. Paramount is not expected to stand in their way if they want to leave sooner.
One of the other outstanding elements is that DreamWorks needs to land a distribution deal with a new studio to release its films and DVDs. When banks lend this kind of money to a production company, they typically want to know there’s a U.S. distributor in place, say industry observers. Not that there’s any shortage of studios who want to be in business with Spielberg. In the coming weeks, DreamWorks presumably will begin to have formal talks with potential new studio partners. The company is looking to make a straight “rent-a-system” deal in which it simply pays a studio a distribution fee much like the arrangement George Lucas has with his “Star Wars” franchise at 20th Century Fox.
DreamWorks declined to comment. JPMorgan didn't respond to a request for comment.
It’s no secret that Spielberg’s No. 1 choice for a new distributor has always been and remains Universal Pictures, where he began his career with such hits as “Jaws” and “E.T. The Extra-Terrestrial” and still maintains offices on the back lot.
There’s no guarantee, however, that Universal Pictures president Ron Meyer will automatically consent to all of DreamWorks' demands. Some Universal executives have complained that they don’t necessarily want their former movie chief, Stacey Snider, who co-heads DreamWorks, sitting in on their marketing meetings. Of course, there’s always Fox, where Geffen has a close relationship with media mogul Rupert Murdoch, whose News Corp. owns the Century City studio.
And, though it’s an intriguing long shot, Spielberg could decide to keep Paramount as his new company’s distributor since, stressed relations notwithstanding, he was happy with how the studio marketed this summer’s blockbuster “Indiana Jones and the Kingdom of the Crystal Skull.” The sequel racked up $100 million in U.S. ticket sales its first three days of release, handing him his biggest opening ever for a movie he directed. He's also pleased with how Paramount handled the release of “Tropic Thunder,” directed by Ben Stiller, which was the top-grossing film for three consecutive weekends after opening Aug. 13.
-- Claudia Eller
The billboards for "The Women," Picturehouse’s comedy-drama opening Sept. 12, won’t win any awards for subtlety. The Time Warner Inc. specialty label just hopes they help win group ticket sales.
"Get your friends together and celebrate the women," the tagline implores.
By "friends" the implication is clear: Women should buy a whole bunch of tickets and go as a group.
Picturehouse, which is releasing its final film before getting subsumed by Warner Bros., hopes it has a mini-version of "Sex and the City" on its hands with the $16-million production starring Meg Ryan, Annette Bening, Eva Mendes, Debra Messing and Jada Pinkett Smith in a tale of interweaving relationships rife with gossip and scheming.
New Line Cinema and Warner’s "Sex and the City" opened in May to a surprising $57 million, driven in part by group sales as gals got together to watch the movie with their friends, hooting and hollering at the screen. "The Women," written and directed by "Murphy Brown" creator Diane English, is an update of the snarky 1939 classic based on a Broadway play. Like the earlier film, the gimmick is that no males appear, even on the streets of New York City.
Originally the movie was going to get a lower-profile rollout. But Picturehouse President Bob Berney said that after "Sex and the City" blew away expectations, he prevailed upon Warner to give his movie a wider release with far more marketing support. The prints and advertising budget mushroomed to $25 million, from about $10 million, and the movie will open at 2,800-plus theaters, instead of 500 as originally scheduled.
"We hope that because of our campaign, women will plan to go to the movie together," Berney said. "We're trying to be very upfront."
Although the success of "Sex and the City" helped shape the release pattern, the push for group sales was always part of the marketing strategy, Berney said.
The trailers tease: "When the women get together, there will be no secrets, no lies, no warnings." When the stars plug the movie on talk shows, they will drop hints about how the viewing experience is meant to be shared among girlfriends, he said.
Of course, despite its popularity in film buff circles, "The Women" is nowhere near the cultural phenomenon that "Sex and the Ciy" became after a decade on TV, including reruns.
Rival studio executives say "The Women" is tracking strongly with females over 25, but overall it is shaping up more like "The Sisterhood of the Traveling Pants" for the older set than a "Sex and the City" or other films that have attracted heavy group sales, including the "Star Wars" series and "The Passion of the Christ."
Berney says he’d be happy with an opening weekend of $10 million or better. If women show up in bunches, he could be celebrating as well.
-- Josh Friedman
The Parents Television Council is trying to ground the CW television network by encouraging advertisers to boycott CW shows because of a scene in the opening segment of its newest hit, "90210."
But so far it looks like the council has only played into CW's marketing hands.
Within hours of CW's highly rated premiere of the drama about spoiled and precocious kids in Beverly Hills, the watchdog group lodged a complaint.
"The CW Network has openly, wantonly and eagerly violated every business tenet of the broadcast industry. They shocked viewers during the family hour by depicting high school children engaged in oral sex in their car," said the council's president, Tim Winter. "It's such a sucker punch to viewers and a lot of families. No one tuned into '90210' thinking, "Hey, maybe I will get to see [oral sex]."
The scene shows a boy sitting in a car and then a girl's head rising.
The council suggested that CW duped advertisers by withholding advance copies of the pilot and that it directed the show's producers to include the suggestive scene in the 8 p.m. show. The network denies both charges.
"For the record, '90210' was screened in advance of broadcast through the customary advertiser screening service," CW said in a statement. "In addition, the suggestion that we edited controversial material into the show at the last minute is as ridiculous as it is inaccurate."
This isn't the council's first tangle with CW, a joint venture of Warner Bros. and CBS Corp. Sexually provocative magazine ads and billboards for the network's show "Gossip Girl" has also left the group fuming. The council calls the ads "smutty." Winter contends that instead of targeting its core demographic group of 18- to 34-year-olds, CW is reaching out to a much younger audience of teenagers and preteens with slogans such as "Every Parent's Nightmare," which Winter says particularly resonates with teens who live at home.
But the council appears to have handed CW a marketing gift with a ribbon. CW has grabbed the council's criticism and turned it into an endorsement. One ad for "Gossip Girl" features two teenagers in bed under the headline: "Mind-blowingly inappropriate" -- a quote that came from the Parents Television Council.
Just like parents, CW knows that if you want kids to watch something, tell them it's off limits.
-- Meg James
Whenever they break bread with Projector, studio executives and movie producers tend to offer a variation of the same comment: "Good column, dude, but I hate that darn box that goes with it. Why do you have to predict the grosses instead of just letting a movie do what it does and then reporting, you know, the real numbers."
The answer is that theatrical box office is not only a revenue indicator for an important local industry, Hollywood, but, like it or not, a national spectator sport. Putting topspin on the story makes our coverage more interesting. And to paraphrase Projector’s favorite sports radio talk show host, Colin Cowherd, we’re in the interesting business.
Since we keep score on the movie studios, we thought it was only fair to see how Projector and his competitors in the booming, participatory sport of box-office prognostication were performing. For the results from the 18-week summer season, see this week’s Movie Projector column.
Hoping to bootstrap on the success of “Army Wives,” Lifetime Entertainment has enlisted a veteran TV executive as its new programming chief.
JoAnn Alfano, a former NBC development executive who helped guide such shows as “Will & Grace,” “Scrubs” and “The Fresh Prince of Bel-Air,” on Wednesday reported to work as Lifetime’s executive vice president of entertainment. She will be in charge of programming and scheduling for Lifetime Television and its sister channel, the Lifetime Movie Network.
Alfano, in some ways, is a real-life made-for-Lifetime story: The 49-year-old breast cancer survivor began her TV career two decades ago as a publicist on NBC’s “The Cosby Show” and worked her way up the network’s drama and comedy programming ranks. She became president of Broadway Video Television, “Saturday Night Live” producer Lorne Michaels' firm, where she helped fashion the Tina Fey sitcom “30 Rock” for NBC.
Last year, Alfano put out her own production shingle.
Now her challenge will be to select and nurture shows and movies that will continue to build on the ratings momentum of “Army Wives,” the drama about military families that is among the highest-rated shows on cable television. “Wives” has helped Lifetime to shed its frumpy image. And, after several years of management turnover, the network finally appears to be stabilizing.
It plans to add the popular “Project Runway” to its lineup –- pending, that is, a ruling from a New York court. NBC Universal sued to block the show’s move from its current home on Bravo, which NBC owns.
“For me, this was about the direction that Lifetime is going and the work that they are doing,” Alfano said in an interview. “The network has become very current, relevant and energized.”
She replaces Susanne Daniels, who resigned in June as president but continues as a consultant to Lifetime, a joint venture of Walt Disney Co. and Hearst Corp. It was Daniels who recommended Alfano during a two-month search.
“I did a lot of vetting and no one said a bad thing about JoAnn,” Lifetime CEO Andrea Wong said. “She has great creative instincts and abilities, and she brings to Lifetime a strategic point of view and strong leadership skills.”
Wong, a former ABC executive who joined Lifetime last year, said Alfano was particularly well suited for the job because she had worked in so many areas of the business. Wong has been looking to reinvigorate the network and bring in new and younger viewers with edgier fare.
-- Meg James
This weekend, Hollywood will officially celebrate a summer box-office record with $4.2 billion in U.S. and Canadian grosses as the early-May-through-labor-Day season ends.
Of course, that's a little bit like saying that Michael Phelps won the 400 meter relay because they shrunk the length of the pool. The fact is Hollywood can only boast -- and barely at that -- that it set a new summer box office "record" due to higher movie ticket prices, not because more people actually went to theaters.
Although box office revenue through Monday will top last summer’s $4.18 billion by 1% or less, the estimated 586.6 million total tickets sold will be down about 3.5% from last year and 10.2% from the modern-day peak in 2002, when the first “Spider-Man” came out.
Movie attendance has been virtually flat over the last decade despite year-to-year fluctuations, as studios and theater owners compete with computer gaming and other industries for the hearts and wallets of consumers.
Even so, exhibitors have been able to hike ticket prices by an estimated 53% since 1998, to a national average of $7.16 (including matinees and other discounts) this year, according to the National Assn. of Theatre Owners.
Angelenos, of course, usually pay a much stiffer rate as L.A. has some of the highest ticket prices in the nation.
Warner Bros.’ “The Dark Knight” will end up accounting for about 12% of this summer’s revenue - a chunk Dergarabedian called “unprecedented.” The movie will top $500 million domestically this weekend and appears headed for at least $1 billion worldwide.
Premium ticket prices for movies like “The Dark Knight” at giant-screen Imax locations, and for 3-D movies like “Journey to the Center of the Earth” at digitally equipped theaters, also have helped boost the national average.
-- Josh Friedman
In what shouldn't surprise anyone, Veteran film industry executive Mark Urman is leaving beleaguered ThinkFilm to become president of newly formed independent distribution company Senator Entertainment U.S.
The move, announced Friday by Senator, follows months of complaints from filmmakers and outside vendors that ThinkFilm, headed by investor David Bergstein, had failed to pay its bills on time.
Senator, the German movie company whose U.S. arm was recently acquired by producer Marco Weber, will establish offices in Los Angeles and New York.
Urman said was he “thrilled” to be joining Weber, but the announcement made no mention of the current financial woes at ThinkFilm, best known for such art-house fare as the drama “Half Nelson,” the documentary “Spellbound” and Sidney’s Lumet’s “Before the Devil Knows You’re Dead.”
Urman co-founded ThinkFilm in 2001, several years before its acquisition by Bergstein and his partners, and most recently served as its president. Prior to that, he was co-president of Lionsgate Releasing. He will work with Weber in establishing “all windows of distribution” for the Senator's slate, the company said, allowing Weber to concentrate on original productions.
Senator is prepping two productions: “Unthinkable,” a thriller starring Samuel L. Jackson, which starts shooting in September, and “Clocktower,” based on Capcom’s video game franchise, to begin shooting later this year. It recently bought U.S. rights to the crime drama “Public Enemy No. 1,” starring Vincent Cassel, Gerard Depardieu and Matthieu Amalric.
Calls to Bergstein and Urman were not returned.
In a recent interview, Bergstein said he was lining up new financing for ThinkFilm and paying off the company’s obligations.
-- Josh Friedman